Reserve Bank of Zimbabwe governor Dr John Mushayavanhu has urged companies whose shares were suspended from the Zimbabwe Stock Exchange amid suspected illegal trading in their stocks to consider listing on the Victoria Falls Stock Exchange.Zimbabwe travel guide
The VFEX, a US dollar-based subsidiary of ZSE and aimed at facilitating foreign currency investments, started trading on October 26, 2020
It serves as an offshore financial services centre, offering USD-denominated trading and several tax incentives.
Three companies, namely Old Mutual Zimbabwe, PPC Zimbabwe and Seed Co International, had their shares suspended from trading on the ZSE in June 2020 amid concerns that the fungibility of their stocks was being used to create implied exchange rates used in foreign exchange trading on the parallel market.
Old Mutual, whose primary listing is the Johannesburg Stock Exchange, also maintains secondary listings in Malawi and Namibia.
PPC is also listed on the JSE, while Seed Co also trades on the Botswana Stock Exchange.
Fungibility means that shareholders in the three companies could buy shares from the ZSE and sell them on the offshore markets where the companies are dually listed.
As dual-listed, highly fungible counters, authorities suspected that their share prices—particularly the “Old Mutual Implied Rate” (OMIR)—were used to benchmark and speculate on the parallel market exchange rate, driving local currency instability.
Finance, Economic Development and Investment Promotion Minister Mtuli Ncube is on record saying the suspension was meant to allow investigations into suspected illicit transactions around the fungible stocks.
The central bank governor said the suspended counters could list on VFEX, stressing the conditions that led to their suspension had been addressed, following the launch of the Zimbabwe Gold in April 2024, which has remained largely stable.Zimbabwe travel guide
“The suspended counters should consider listing on the Victoria Falls Stock Exchange because there is no longer that risk of currency volatility and the issues of implied rate, which resulted in the suspension,” Dr Mushayavanhu said.
His remarks come at a time when the monetary policy framework has stabilised the exchange rate, helping restore confidence in the financial system and strengthening the performance of capital markets.
Zimbabwe’s capital markets have in recent months shown signs of renewed momentum, with both the ZSE and VFEX recording improved trading activity and growing market capitalisation.
Latest market data shows that both the ZSE and VFEX extended gains recorded in January, reflecting improving investor sentiment and rising trading activity.
Trading on the ZSE maintained an upward trajectory in February, with market turnover rising more than 111 per cent month-on-month to ZiG1,93 billion in February, up from the ZiG914,5 million recorded in January, reflecting renewed investor appetite.
Statistics show that the VFEX All-Share Index rose by 6 percent to 224.06 points in February, up from 211.36 points in January, reflecting a firm appetite for the United States dollar-denominated bourse.
Analysts attribute part of this performance to tighter monetary policy, greater foreign currency availability and a slowdown in exchange rate volatility, which previously undermined investor confidence.
At the centre of the issue was the Old Mutual Implied Rate (OMIR), a pricing mechanism derived from the share price of Old Mutual listed on multiple exchanges.
The rate was widely used by market participants to determine a market-based exchange rate for the Zimbabwe dollar, which was often significantly higher than the official rate at the time.Zimbabwe travel guide
The Government authorities argued that this arbitrage opportunity was contributing to instability in the local currency and suspended trading in the affected counters in an effort to contain speculative activity.
Since then, however, the country’s monetary authorities have introduced a series of policy measures aimed at restoring macroeconomic stability, including tighter control of the money supply, greater use of foreign currency in the economy and reforms to the foreign exchange market.
Dr Mushayavanhu said these measures have helped reduce exchange rate volatility and limit speculative behaviour that previously distorted the market.
“Against this backdrop, the risks that prompted the suspension of fungible shares have significantly diminished, creating room for alternative listing options such as the VFEX,” he further highlighted.
Meanwhile, Old Mutual Zimbabwe says engagements with authorities continue as stakeholders explore possible pathways toward resolving the suspension.
In an interview last year, Old Mutual Zimbabwe group chief executive Mr Samuel Matsekete said discussions were ongoing, although the matter ultimately falls under the authority of government principals.
“They negotiate and engage with the authorities here because the OML listing really is our holdings,” he said.
“There have been a number of engagements to try and see if there can be a way forward that allows parties invested in the share or those that want to invest in the share to trade, but we still are having the share suspended.
“I believe that where we are now with the authorities is to explore really what could be done in the meantime if the suspension can be lifted.”
Market experts say resolving the status of suspended counters, particularly Old Mutual Zimbabwe, could have important implications for the local capital market.Zimbabwe travel guide
Mr Lloyd Mlotshwa, head of research at broking firm IH Securities, previously noted that the prolonged suspension has negatively affected many public investors who hold the shares directly or indirectly through pension funds.
He noted that a return of the counter to trading would benefit the broader market.
“The ZSE will benefit greatly from the re-admission of Old Mutual; it creates another liquid investment alternative in a blue-chip business with an extensive track record in this country. This will lift the current market capitalisation of the ZSE and improve daily trading volumes,” he said.
Investment analyst Mr Enock Rukarwa also believes that the potential re-listing of Old Mutual would strengthen investor confidence and restore key market fundamentals.
According to Mr Rukarwa, the return of the counter would provide investors with an important avenue for capital appreciation while improving market liquidity.-herald
