FINANCE and Economic Development Minister Mthuli Ncube has disappointed investors and Zimbabwe will see a capital flight after Ncube restricted trading in three companies’ stocks to try and halt a rout of the nation’s currency.
The sentiments were expressed by Zimbabwe Stock Exchange (ZSE) chief executive officer, Justin Bgoni.
The measure to limit trading of dual-listed shares Old Mutual Ltd., PPC Ltd. and Seed Co. will be in place for a year, Ncube said in a Government Gazette. The order doesn’t have any impact on the settlement of transactions in the stocks conducted before March 13, as long as they’re effected by March 18, Ncube said.
Old Mutual’s stock also trades in London and South Africa, PPC in South Africa and Seed Co. in Botswana. Such dual listings and differing exchange rates can offer arbitrage opportunities. The ministry’s action means the three stocks are no longer fungible, or regarded as being equal value to those traded on other exchanges.
Bgoni said the government’s action was disappointing and would only increase foreign-investor flight from the country.
“We are disappointed with this action and felt that the market should have been allowed to continue,” Bgoni told Bloomberg.
“There were measures already done by the Securities and Exchange Commission of Zimbabwe and these should have been given a chance to see if they would work.”
Zimbabwe’s currency has weakened about 86% against the dollar since February 2019, when the government dropped a one-to-one peg of its dollar to the greenback in February and later outlawed the use of foreign exchange.
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