VFEX plans to list an ETF linked to Old Mutual, PPC shares

By Ray Ndlovu

Zimbabwe plans to set up an exchange-traded fund that will give investors exposure to shares in insurer Old Mutual and cement maker PPC on the Victoria Falls Stock Exchange (VFEX).

The ETF should be available next month, with pricing derived from trading in the two stocks in Johannesburg, Justin Bgoni, chief executive officer of the stock exchange, said in an interview. The bourse is awaiting approval for the plan from the Securities and Exchange Commission of Zimbabwe.

Trading in Old Mutual and PPC on the Zimbabwe Stock Exchange, the main Harare bourse, was suspended in July 2020 after authorities blamed moves in the insurer’s locally listed stock for fueling a collapse in the currency because of a mechanism known as the Old Mutual Implied Rate, or OMIR. The two counters won’t be listed on the VFEX and remain halted in Harare.

“It will give people choice to get in,” Bgoni said. “We will ensure that there are market makers to ensure liquidity.”

The OMIR was used by businesses to calculate the future cost of goods and services, measuring the difference between Old Mutual’s share prices in Johannesburg, Harare and London to produce forward pricing on the Zimbabwean dollar. The South African insurer was not involved in determining the rate.

A spokesperson for Old Mutual didn’t immediately respond to an emailed request for comment.

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