Zimbabwe stocks slide as market reopens without Old Mutual
Seedco and PPC also prevented from trading
Zimbabwean stocks tumbled as trading resumed for the first time in five weeks after authorities had shut down the exchange for allegedly contributing to the plunge in the local currency.
The government has said that the shares of Old Mutual, PPC and Seedco were being used to manipulate foreign-exchange rates. Those stocks, which have dual listings on other exchanges outside the country, were not allowed to resume. The main index fell 4.5%, while mining counters dropped 2.4%.
Activity was light, with 117 trades worth Z$10.25m (R475 305.07) comparing poorly with an average daily turnover of Z$95m in June.
“It has been an excruciating time,” Justin Bgoni, CEO of the Zimbabwe Stock Exchange said on Twitter, referring to the suspension in dealing that started on June 29. He said he was satisfied with the volumes, though, given the circumstances.
The exchange has been in weeks of talks with the government on how to reopen the market. The ruling Zanu-PF party demanded that the listing of Old Mutual, the biggest company by market value, be terminated. Authorities said the insurer’s share price was being used to determine a future rate for the country’s currency.
The market upheaval has added to an economic crisis in the southern African nation, where inflation has surged to more than 700% amid shortages of food, fuel and foreign exchange. The Zimbabwe dollar trades at more than 100 to the US dollar in the parallel market, compared with the official rate of 76.759.
The bourse has been a counter to inflation, with the all-share index having risen more than sevenfold in 2020.
The state intends to transfer the three companies’ listings to a foreign currency denominated exchange in the resort town of Victoria Falls, slated for opening later in 2020.
The resumption of trading should help restore the integrity of the local market and offer relief to people who are unable to access their investments, said Ranga Makwata, an independent financial analyst.
“Obviously, the collateral damage from the suspension is huge and it may take a while to restore investor confidence to its presuspension level,” he said.
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