Online Reporter
Nelson Gahadza, [email protected]
RESERVE Bank of Zimbabwe governor Dr John Mushayavanhu has urged companies whose shares were suspended from the Zimbabwe Stock Exchange (ZSE) amid suspected illegal trading in the company shares to consider listing on the Victoria Falls Stock Exchange (VFEX).
The VFEX, a US dollar-based subsidiary of the ZSE designed to facilitate foreign currency investments, commenced trading on 26 October 2020. It operates as an offshore financial services centre, offering USD denominated trading and a range of tax incentives.
Three companies — Old Mutual Zimbabwe, PPC Zimbabwe and Seed Co International — had their shares suspended from the ZSE in June 2020 following concerns that the fungibility of their stocks was being used to create implied exchange rates used in parallel market foreign currency trading.
Old Mutual, whose primary listing is on the Johannesburg Stock Exchange, also trades in Malawi and Namibia. PPC is dually listed on the JSE, while SeedCo International is listed on the Botswana Stock Exchange.
Fungibility allowed shareholders to buy shares on the ZSE and sell them on foreign markets where the companies were also listed. As dual listed counters, their share prices — especially the “Old Mutual Implied Rate” (OMIR) — were suspected of being used to benchmark and speculate on parallel market exchange rates, fuelling volatility in the local currency.
Finance, Economic Development and Investment Promotion Minister Mthuli Ncube previously said the suspension was meant to facilitate investigations into suspected illicit transactions involving the fungible stocks.
Dr Mushayavanhu said the suspended counters could now consider the VFEX, emphasising that conditions which led to the suspension had since stabilised, particularly following the April 2024 introduction of Zimbabwe Gold (ZiG), which has remained largely stable. “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 comments come as Zimbabwe’s monetary policy framework continues to stabilise the exchange rate, restoring confidence in the financial system and strengthening capital market performance.
In recent months, both the ZSE and VFEX have shown renewed momentum, recording improved trading activity and expanding market capitalisation. Latest data shows both exchanges extended gains recorded in January, reflecting rising investor confidence and increased trading volumes.
Trading on the ZSE maintained an upward trajectory in February, with market turnover increasing by more than 111 percent month on month to ZiG1,93 billion, up from ZiG914,5 million in January.
The VFex All Share Index also rose by six percent to 224,06 points in February, from 211,36 points in January, highlighting growing interest in the US dollar denominated market.
Analysts attribute the improved performance to tighter monetary policy, increased foreign currency availability and reduced exchange rate volatility, which had previously eroded investor confidence.
At the centre of the original suspension was the Old Mutual Implied Rate (OMIR), which was derived from Old Mutual’s share prices across multiple markets. The market widely used this rate to determine an unofficial parallel exchange rate for the Zimbabwe dollar, often significantly above the official rate.
Government authorities argued that this arbitrage opportunity contributed to currency instability and suspended trading in the affected counters to curb speculative behaviour.
Since then, monetary authorities have implemented several measures aimed at restoring stability, including tighter control of money supply, broader use of foreign currency and reforms to the foreign exchange market.
Dr Mushayavanhu said these interventions had significantly reduced volatility and speculative distortions.
“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 discussions with authorities are ongoing as stakeholders explore possible ways forward regarding the suspension.
In an interview last year, Old Mutual Zimbabwe group chief executive Mr Samuel Matsekete said engagements were continuing, although final decisions rested with Government principals.
“They negotiate and engage with the authorities here because the OML listing really is our holdings. 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,” he said.
Market experts say resolving the suspended counters — especially Old Mutual Zimbabwe — could significantly impact the capital market.
Mr Lloyd Mlotshwa, head of research at IH Securities, said earlier that the prolonged suspension had affected many public investors, including pension fund members, and that a return to trading would be beneficial.
“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 Old Mutual’s potential return would boost investor confidence and help restore key market fundamentals. He noted that the re-listing would provide investors with an important avenue for capital appreciation while improving market liquidity.
