Tread carefully with Old Mutual – Analysts

By Simbarashe Musaki and Tendai Dune
THE Old Mutual Limited implied rate was coming from fungibility of its shares and the black market was taking a clue from it, but suspending it from the Zimbabwe Stock Exchange has got deeper ramifications to the country’s financial service sector, an economic expert has said.
Responding to the speculation, economic guru Persistence Gwanyanya, in an exclusive interview with The Business Connect hinted that OML is the biggest institution in the country, hence any approach to it should be well measured, and calculated before it sees the light of day.
“That Old Mutual is suspended in my view is not true at the moment. Its people who are making speculation from discussions that happened somewhere, but we are going to be guided by official position if something of that nature happens. I don’t think policymakers would act unreasonably to the extent of destabilizing the whole financial service sector, in view of the size and dominance of Old Mutual. Remember, CABS is a subsidiary and is one of the biggest banks in the country, and in the pension sector, it holds a big chunk.
“Old Mutual is the biggest financial institution in Zimbabwe, it is holding the biggest pension fund in the country, so any approach to it which is not be well measured, and carefully considered has got deeper ramifications to the financial service sector of Zimbabwe. I don’t think it is the intention of policymakers to get to that extent,” he said.
Gwanyanya further explained that despite the suspicion that the black market was taking tip-off from the Old Mutual Implied Rate (OMIR), which was suspended in April, ordinary people were actively participating in share trading.
“Coming to the effect of Old Mutual Implied Rate you may also to be reminded that OMIR was only coming as a result of fungibility of its shares, which functionality was suspended 3 months ago. It’s not only Old Mutual shares that are or were fungible, but also of Lafarge and Seed Co international. This is the strong basis on which the Old Mutual implied rate was calculated and it is true that the black market to a greater extend was taking a clue from this implied rate.
“You must also understand that whilst the OMIR is being calculated, and the suspicion that the black market was taking a clue, I don’t think to lay the blame on Old Mutual for analysts who are doing calculations is fare. Old Mutual itself has been participating to a very lesser extent on the trading of Old Mutual shares, it is ordinary people who were trading,” said Gwanyanya.
The issue of whether or not the local bourse should be de-listed has hogged the limelight in Zimbabwe’s economic corridors, with the ruling party ZANU PF chipping in on the issue when the party’s acting information secretary Patrick Chinamasa released a statement suggesting that OML be delisted from the ZSE, prompting Old Mutual to respond, albeit vaguely.
To – date, the local bourse remains suspended, as the nation awaits finance minister Mthuli Ncube’s 2020 Economic Statement.

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