Government will wait for the conclusion of an investigation into the Zimbabwe Stock Exchange (ZSE) before allowing it to reopen, and this may take up to two weeks, Finance Minister Mthuli Ncube said Monday.
The stock market halted trade on June 29, after the government accused the exchange of being one of the platforms undermining the feeble Zimbabwe dollar.
“We are waiting for the conclusions of the investigations led by the Financial Intelligence Unit (FIU). They should be able to conclude within the next week or two weeks. Then we will review that and then decide on modalities for reopening,” Ncube said in a webinar hosted by the Daily News on Monday morning.
The ZSE’s suspension has deeply damaged already weak investor sentiment and added pressure on Ncube. He made no mention of the ZSE’s fate in his mid-term review statement on Thursday. Recommendations of the FIU, a unit of the Reserve Bank of Zimbabwe, would guide the Ministry of Finance.
“It’s just a matter of going through the paces and receiving the reports once the investigation is complete. It should have certain recommendations and we will follow those recommendations so that we are systematic. All we are trying to do as regulators is to intervene the right way; is to be positive about the issue, make sure there’s some discipline in our private sector activities.”
ZSE and OMIR
The government claims that the ZSE has been used as a base for activities that have undermined the local currency. Authorities blame Old Mutual for the Old Mutual Implied Rate. Private individuals set this alternative exchange rate using differences between the prices of Old Mutual shares in Zimbabwe and those abroad.
Old Mutual denies the allegations and has said it is cooperating with investigators. The ruling ZANU PF party has recommended that the ZSE be reopened. However, it wants Old Mutual delisted and listed on a separate new forex-denominated exchange.
The FIU is also currently investigating what authorities claim to be “unscrupulous” business practices by mobile phone companies. A search warrant has since been issued on EcoCash, the country’s largest mobile phone operator.
Investment professionals say the moves on the market are a grave threat to investment.
“The action to close the ZSE and threat to delist Old Mutual creates an existential threat to the country’s financial, insurance and investment industry,” Investment Professionals Association of Zimbabwe (IPAZ), the association of stock market analysts said in a note last week.