Making sense of Old Mutual's suspension from Zimbabwe Stock Exchange
Old Mutual has reportedly agreed to shift its listing to a newly created stock exchange in Zimbabwe that will deal only in foreign currency.
The move comes after the Zimbabwean government seemingly blamed a falling currency on the company's share price.
Bruce Whitfield gets input from Dianna Games, chief executive at business consultancy, Africa At Work.
Old Mutual has been suspended from the stock exchange and the government has accused it of all kinds of things - currency instability, externalising currency etcetera and the thing in Zimbabwe which a lot of people don't know is because of the 'weirdness' of that economy it's very difficult to gauge what the exchange rate should be.Dianna Games, Chief executive - Africa At Work
There is something that has been developed over many years called the Old Mutual Implied Rate [OMIR] which basically examines the difference between the currency on the Harare and the London exchange and the share price and so on...Dianna Games, Chief executive - Africa At Work
... it's a complicated formula being used for many years but the government has now scapegoated it for the problems that the currency has basically fallen through the floor. They're looking for scapegoats and Old Mutual is one of those.Dianna Games, Chief executive - Africa At Work
Games says it's emerged that because of the foreign currency crisis, Zimbabwe has now set up a new stock exchange it has named the Victoria Falls Stock Exchange.
Old Mutual has now today apparently agreed to list on that stock exchange.Dianna Games, Chief executive - Africa At Work
Listen to Games' analysis below:
Source : https://www.oldmutualinsurance.co.za/