AUTHORITIES have wrapped up an investigation into the stock market operations of two suspended Zimbabwe Stock Exchange (ZSE) blue chips, amid reports that they were now sweating over a decision.
Financial services giant Old Mutual and cement producer PPC were suspended in June last year, facing several allegations around the status of their fungible stocks, which were trading in Zimbabwe and South Africa.
They were suspended together with agro-technology outfit SeedCo, which was trading its stock on the Botswana Stock Exchange and given the option to list on Victoria Falls Stock Exchange, which began trading in October.
SeedCo has since moved to the resort town but PPC and Old Mutual have not officially updated the market about their plans.
A top official close to the decision-making process who spoke as Finance minister Mthuli Ncube this week further extended the suspension by another year said government was treading on eggshells in the determination of the two’s fate, and had decided to extend the suspension to comb through the report and reach a good decision.
Whatever decision is made would have a material impact on investors, particularly those holding on to the two stocks.
“This matter is sub judice and therefore I cannot really give you much without preempting (the case),” said the source.
“The only sensible thing to do was to extend the suspension while we agreed on the solution,” the source added.
In his directive extending the suspensions issued Friday last week, Ncube said; “In my capacity as an exchange control authority…hereby order the suspension, for a period of 12 months from the publication of this general notice ending on the March 11, 2022, of every authority, directive or order granted by any exchange control authority allowing the fungibility of shares of the following companies listed on the Zimbabwe Stock Exchange — (i) Old Mutual Limited; (ii) PPC Limited”.
Lack of a binding decision to the matter brings into sharp focus the country’s policy consistency and clarity.
The order published last Friday also applied to the entire capital markets community including securities dealers and transfer secretaries.
The development comes amid an Old Mutual PPC share valuation standoff.
The market has called for a method that uses prevailing share prices for the two stocks on the Johannesburg Stock Exchange in valuing their stocks.
As previously reported by the Zimbabwe Independent, valuation of the two firms’ stocks is material to the fees earned by fund managers as well as the asset base of companies who are holding these stocks in this inflationary environment.
Pension funds and insurance companies, who fund about 70% of investment on the ZSE, are perhaps the most concerned constituency.
Fund managers have been pushing Seczim for the directive to be made formally and come into effect in line with legal and operational procedure.
But the government has been opposed to the move, instead preferring valuation be on the basis of the share price at the date of suspension.