Zimbabwe sacrifices trade in Old Mutual, PPC stock to halt currency rout

By Ray Ndlovu

(Bloomberg) – Zimbabwean Finance Minister Mthuli Ncube restricted trading in three companies’ stocks to try and halt a rout of the nation’s currency.

The measure to limit trading of dual-listed shares Old Mutual, PPC 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.

Justin Bgoni, the Zimbabwe Stock Exchange’s chief executive officer, 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 said by phone from the capital, Harare. “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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