Zimbabwe and South Africa are cooperating to resolve the issue of multi-listed firm Old Mutual, the trading of whose shares on the Zimbabwe Stock Exchange has been suspended.
Old Mutual is primarily listed on the Johannesburg Stock Exchange (JSE), and is also listed on the Zimbabwe Stock Exchange and the London Stock Exchange as well as on other bourses in the region.
The resultant fungibility of its stock has long been exploited by speculators to transfer foreign currency out of Zimbabwe, according to a report in The Herald.
Fungibility has created an opportunity for the determination of foreign exchange rate in Zimbabwe — the so-called Old Mutual Implied Rate (OMIR) — which unscrupulous businesses have been using to “forward price” their goods thereby driving up inflation.
Even after authorities suspended the stock’s fungibility for a period of 12 months, some economic players continued to use the OMIR to determine prices, prompting the government not only to suspend trading on the Zimbabwe Stock Exchange, but also to consider moving Old Mutual to a US dollar-denominated stock exchange.
Following an engagement with Foreign Affairs and International Trade Minister Sibusiso Moyo, South African ambassador to Zimbabwe Mphakama Mbete said, “We discussed . . . issues relating to matters that have arisen around Old Mutual, an old South African company that has been operating in Zimbabwe for many years and what to do about that.”
He added, “We had a good understanding of measures that are being taken now.”
Established in 1845, Old Mutual Limited is headquartered in Cape Town, and engages in the provision of investment, savings, insurance and banking services. Old Mutual was primarily listed on the London Stock Exchange, but in June 2018, it moved its primary listing from London to South Africa and re-listed on the local equities market as a secondary listing.
Bloomberg reported earlier this month that Old Mutual’s operations were continuing as normal while it sought clarity on the matter.
Mr Clement Chinaka, Old Mutual’s managing director for Rest of Africa, said in an emailed statement to Bloomberg that the insurer, which has operated in the country for more than 120 years, “has been fully committed to contributing to the sustainable long-term development of the Zimbabwean economy”.
Old Mutual is the largest company on the Zimbabwean bourse by market value. Old Mutual Zimbabwe’s subsidiaries include the Central Africa Building Society (CABS), Old Mutual Life Assurance Zimbabwe, Old Mutual Insurance Company Old Mutual Securities, Old Mutual Property (Real Estate), Old Mutual Investment Group, and Three Anchor Investments.