Analysts commend govt’s move to suspend external trading of shares

By ZBC Reporter
THE move by the Government to suspend the external trading of shares in three counters dually listed in different markets across the globe has been described as the right move in stabilising the local currency.
The development has been necessitated by the need to avoid transferring funds out of the country through buying shares locally and selling them in foreign stock exchange markets thereby creating artificially high foreign exchange rates.
The Government suspended the international trading of shares in three counters namely Old Mutual, Seedco International and PPC.
Economists including, John Robertson have welcomed the move saying foreigners have been transferring funds through shares which can be sold across borders.
“I agree that investors were using Old Mutual shares to move money out of the country especially trading in Old Mutual shares,” said Robertson.
Robertson admitted that investors were trading predominantly in Old Mutual Shares which were purchased locally, sold in South and the United Kingdom making the Old Mutual Implied Rate, the pseudo foreign exchange rate.
“There was a lot of activity on the Old Mutual Shares and because investors were prepared to move their money outside the country at any cost the rate became artificially high,” he added.
Another stock market analyst, Batanai Matsika said although it is early days to see how this will affect exchange rates, foreign investors were using this as the only alternative to exiting the Zimbabwe market.
“This will lock funds and make it a bit little difficult for the competitiveness of the local stock market but obviously you can’t think of any other avenue left that foreigners were using to transfer funds,” highlighted Matsika.
The suspension of external trading of shares comes at a time when the Securities Exchange Commission of Zimbabwe is conducting investigations to establish how these transactions were being conducted and their impact on the exchange rate.
The suspension of the Old Mutual, PPC and Seedco shares is for a period of twelve months to the 12th of March next year.