Online Reporter
Nelson Gahadza
FOR more than six years, over 30 000 Zimbabwean shareholders were trapped in an investment they could neither add to nor dispose of.
Old Mutual Limited’s suspension from the Zimbabwe Stock Exchange (ZSE) in June 2020, at the height of the storm surrounding the Old Mutual Implied Rate (OMIR), became one of the defining moments in Zimbabwe’s capital markets.
Although the broader market resumed trading two months later, Old Mutual remained suspended, leaving thousands of investors with an illiquid asset and creating prolonged uncertainty around one of Zimbabwe’s largest listed companies.
Now, six years later, Old Mutual’s decision to migrate its secondary listing from the ZSE to the United States dollar-denominated Victoria Falls Stock Exchange (VFEX), subject to regulatory approvals, is being viewed as far more than the return of a single counter.
Market analysts say the move could mark a significant turning point for Zimbabwe’s capital markets by restoring investor confidence, improving liquidity and accelerating the development of a deeper US dollar-based securities market.
The migration resolves the issue that triggered the suspension.
OMIR emerged after investors compared Old Mutual’s share prices on the ZSE, the Johannesburg Stock Exchange (JSE) and the London Stock Exchange to derive an implied exchange rate, which the authorities argued was fuelling activity on the parallel foreign exchange market.
With Old Mutual moving to the US dollar-denominated VFEX, that pricing anomaly is effectively eliminated.
Old Mutual Zimbabwe chief executive Mr Samuel Matsekete said the decision followed years of engagement with the Government and regulators to find a solution that balanced shareholder interests with policy objectives.
“We needed to arrive at something that would work for the more than 30 000 shareholders on the Zimbabwe register, while also taking into consideration the requirements of the regulators and policymakers,” he said.
Mr Matsekete said the VFEX had matured significantly since its establishment in 2020 and now possessed the depth and diversity required to support a company of Old Mutual’s size.
“The VFEX has now come into its own. It is a deeper market and has demonstrated the attributes of a growing exchange. In terms of the depth of transactions and the diversification of assets available on the exchange, it now presents a level of maturity that supports the aspirations of our shareholders,” he said.
Investment analyst Mr Enock Rukarwa believes the significance of the migration extends well beyond Old Mutual itself.
He said the development represents a major milestone for Zimbabwe’s entire capital markets ecosystem rather than a victory for one exchange over another.
“This is a positive development for the entire capital markets, not only the ZSE or VFEX, but for the entire value chain,” he said.
Mr Rukarwa said Old Mutual’s sizeable market capitalisation would significantly increase the value of the VFEX, while addressing one of the country’s biggest constraints: limited market liquidity.
For years, stockbrokers and investment advisers have argued that subdued trading activity has largely been driven by a shortage of quality investable counters and a relatively small pool of active investors.
“The coming in of Old Mutual is a key development and the fact that Old Mutual is very liquid means you are bringing another dimension which was not there,” said Mr Rukarwa.
“This is a development that, as an economy, we have been waiting for and one that capital markets cherish.”
Mr Rukarwa expects the migration to further cement the VFEX’s position as Zimbabwe’s leading US dollar-denominated exchange. Already, its market capitalisation has surpassed that of the ZSE and he believes more companies could follow suit in the coming months.
Trigrams Investments analyst Mr Wafa Kuchera said the debate should not be framed as competition between the two exchanges.
Instead, he argues that the VFEX and the ZSE perform complementary roles within Zimbabwe’s broader capital market.
“In our view, there is no competition between the VFEX and the ZSE, but rather there is complementarity in the way they operate,” he said.
Mr Kuchera described the VFEX as a key pillar of the Victoria Falls International Financial Services Centre, adding that Old Mutual’s migration reflects the natural evolution of Zimbabwe’s capital markets as economic reforms continue to take shape.
Rather than weakening the ZSE, he believes the migration of established companies to the VFEX could ultimately create room for new listings, fresh capital-raising opportunities and greater domestic participation on the local bourse.
“In short, the VFEX and the ZSE should be viewed as a single market,” he said.
Mr Kuchera believes Old Mutual’s return to active trading will unlock substantial local and foreign investment that has effectively remained dormant since the company’s suspension.
Given the company’s regional footprint and international investor profile, the migration is expected to strengthen confidence in Zimbabwe’s capital markets, while encouraging renewed participation by institutional investors.
Mr Kuchera said the brokerage industry stands to benefit from increased trading volumes. He further said firms should seize the opportunity to modernise their operations by strengthening digital trading platforms, simplifying investment processes and lowering transaction costs rather than relying solely on higher commission income.
Stockbrokers Association of Zimbabwe secretary-general Mr Arnold Chibvongodze described Old Mutual’s migration as a significant and long-awaited milestone for the market.
He said the restoration of trading rights for more than 30 000 shareholders would reaffirm investor property rights and improve overall market liquidity after years during which investors were unable to adjust or exit their positions.
“The move aligns Old Mutual with the US dollar-denominated VFEX, which was established to address longstanding concerns relating to capital mobility and exchange controls,” he said.
Mr Chibvongodze said Old Mutual’s migration represents an important step towards rebuilding investor confidence.
He said the return of one of Zimbabwe’s largest and most recognisable counters would also create new business opportunities for stockbrokers, as existing shareholders resume trading while new investors seek exposure to the US dollar-denominated market.
Mr Chibvongodze said the long-term success of the VFEX should not depend solely on companies migrating from the ZSE.
Instead, he said, the exchange should focus on attracting new listings, particularly large mining companies and other strategic businesses that are not currently listed locally.
He expects Old Mutual’s migration to reinforce an existing shift in brokerage activity towards the VFEX, driven by US dollar-denominated trading, lower transaction costs and improved capital mobility.
“Zimbabwe would benefit most from the complementary growth of both exchanges, with the VFEX attracting new international and export-oriented listings, while the ZSE continues to serve as the primary platform for domestic capital formation,” he said.
