The Zimbabwean Insurance and Pensions Authority is seeking a swift resolution that will bring insurance giant Old Mutual and cement maker Pretoria Portland Cement Co. Ltd. (PPC) will be re-listed on the Zimbabwe Stock Exchange (ZSE) and its fungibility restored.
The two companies’ shares were suspended alongside Seed-Co last year when the government stopped trading on the ZSE after research found investors were using the Old Mutual Implied Rate as a proxy implied by their prices. Exchange rate used on foreign exchanges such as the London Stock Exchange. While Seed-Co International’s shares are now listed on the Victoria Falls Stock Exchange (VFEX), the Insurance and Pensions Commission (IPEC) said the continued suspension of Old Mutual and PPC requires a swift resolution as several local pension funds give theirs Money have been tied up in these two stocks.
“The delay in listing and removing fungibility (suspension) of Old Mutual and PPC stocks is an industry concern as it affects the determination of the assets of pension fund members and policyholders currently tied at the two counters “said IPEC.
IPEC said trading in suspension markets last year had a negative impact on equity holdings in the insurance and fixed income sectors.
“As a result of the suspension of trading on the ZSE, market capitalization was impacted as it decreased from $ 219.16 billion on June 26, 2020 prior to the suspension of trading to $ 179.50 billion on August 28, 2020.
The Minister of Finance and Economic Development, Professor Mthuli Ncube, said yesterday: “The matter is still under discussion.
“We are ready to see the re-listing,” said Prof. Ncube.
Currently, 28 percent of pension fund assets are in the stock market. The sector continued to expand its equity investment portfolio during the reporting period.
The value of investments in publicly traded stocks rose 706.47 percent from $ 3.71 billion as of September 30, 2019 to $ 29.92 billion as of September 30, 2020, notwithstanding the suspension of trading on some key meters Zimbabwe Stock Exchange. Although Seed-Co International continues to only list shares on the VFEX, the US dollar-denominated exchange is expected to provide relief to Old Mutual and PPC investors when these companies eventually list.
However, VFEX will also provide a new investment platform for the country’s insurance and pension firms that are actively seeking US dollar assets for those firms to do business in foreign currency after the 2020 November 2020 release of Legal Instrument 280.
Risk and Investment Management Consulting Actuaries (RIMCA) director Gandy Gandidzanwa said:
“Pension funds can take advantage of the newly formed Victoria Falls Stock Exchange by listing their property holdings as real estate funds,” he said.
“You don’t have to let everything float, let’s say a maximum of 40 percent. This creates instant liquidity in the fund and is also a potential source for offshore investment. “