NEW: Resolution nears for Old Mutual, PPC shares

SIGNIFICANT progress has been made in resolving the ban on trading Old Mutual Limited and PPC shares on the Zimbabwe Stock Exchange (ZSE).

In March 2020, trading of shares in three companies – Old Mutual, PPC and Seed Co Limited – was halted as they were being used as a reference for the parallel market exchange rate (for example, the Old Mutual Implied Rate) through prices on foreign bourses such as the London Stock Exchange.

However, Seed Co  switched to the United States dollar-denominated Victoria Falls Stock Exchange in November 2020.

It eventually returned to the ZSE.

But Old Mutual and PPC are still in limbo.

Addressing the 47th Zimbabwe Association of Pension Funds (ZAPF) annual congress recently, Finance and Economic Development Minister Professor Mthuli Ncube said a resolution was near.

“Engagements are underway with shareholders of the affected companies to find a lasting solution and I must say significant progress is being made,” he said in a speech read on his behalf by chief director for communications in the Ministry, Mr Clive Mphambela.

The suspension of the companies’ shares has weighed heavily on local pension funds, which hold significant equity in the companies.

The anticipated resolution will also resolve emerging concerns around the frozen shares.

Last year, the country’s insurance and pensions sector regulator, the Insurance and Pensions Commission (IPEC), said it had noted inconsistencies in pension funds’ valuations of companies that were suspended from the ZSE.

Pension fund managers were grappling with valuations of their holdings in these companies, especially in an environment affected by inflationary pressures.

Meanwhile, it is likely that pension funds will continue to invest on the ZSE as it has largely outperformed inflation compared to other assets such as the money market.

But local pension funds are also looking to ramp up their offshore investments after IPEC gave the greenlight last year.