Trading on the Zimbabwe Stock Exchange (ZSE) resumes next Monday, but without Old Mutual, Seed Co International and PPC, following an inquiry by the Financial Intelligence Unit (FIU) which compiled a number of recommendations to be taken up by relevant security and criminal investigative arms of Government.
Trade on the ZSE was suspended on June 28 following an unprecedented speculative and destabilising behaviour that was in large part contributing to broader macro-economic instability.
Finance and Economic Development Minister Professor Mthuli Ncube yesterday said the investigations were now complete and a detailed report had been submitted to Government.
The FIU had established that some market players were found to have acted out of line with the norm of the rules of the ZSE and best trading practice, in the nature of their activities.
“Whilst there was no observed evidence of the direct involvement of the listed entities themselves, significant evidence of a strong link between the price behaviour and transaction patterns on internationally-listed shares, namely Old Mutual PLC, Seed Co International and PPC and the behaviour of the parallel market exchange rate was also established, with varying degrees of causality,” said Prof Ncube.
“In particular, the Old Mutual Implied Rate (OMIR) was observed to be the key driver of parallel market pricing behaviour, with many market players in the real economy using this highly visible rate as a benchmark for forward pricing and costing of goods and services, as well as determination of foreign exchange rates in market.
“Given the findings of the inquiry, Government has taken the decision to allow trading on the ZSE to resume on 3 August 2020.”
Old Mutual, Seed Co and PPC will remain suspended from trading, while consultations continue on the best way forward regarding their re-listing, under suitable rules. The public will be updated periodically on progress, said Prof Ncube.
In the meantime, further investigations into market conduct by some identified market participants (brokers, asset managers and share market investors) are being conducted by relevant regulatory and security agencies and the findings will result in suitable actions being taken.
Prof Ncube said Government remained committed to restoring order and removing aberrations on financial markets in order to maintain the credibility and integrity of Zimbabwe’s financial markets so that they continue to play a critical role of attracting global capital into the country.
In June, Government singled out mobile money platforms and the ZSE as vehicles that were being used to undermine the economy through promoting illegal exchange rates and currency trades.