eBusiness Weekly
Kudzanai Sharara
More than two million Old Mutual ordinary shares were transferred from the Zimbabwean register in 2018 as investors, both local and foreign, continue to use the counter as a way of sending money out of the country.
According to trading figures from the Zimbabwe Stock Exchange more than two million ordinary shares were transferred from the ZSE to the London Stock Exchange (LSE) as well as the Johannesburg Stock Exchange (JSE).
This comes at a time when the country is going through a serious foreign currency crisis that has seen both Government and private companies struggle to pay for their foreign obligations for raw materials and machinery imports. Listed entities, such as BAT and Delta among others have also been struggling to repatriate dividends to their foreign shareholders. Delta is sitting on $60 million which could not be repatriated to foreign shareholders as dividends.
Repatriating sale proceeds from the ZSE has been a challenge of late, resulting in foreign investors using Old Mutual as a way of repatriating their investments outside the country.
Portfolio investors trading on the ZSE have also been failing to repatriate funds with the payment backlog for sales having stood at $164 million, as of February 2018. This is despite the Reserve Bank of Zimbabwe having created a Zimbabwe Portfolio Investment Fund that is meant to facilitate repatriation of sale proceeds and dividends for foreign investors on the ZSE.
The move has, however, failed to make an impact as the RBZ has many other priority obligations ahead of meeting investor demands including the importation of fuel.
The removal of Old Mutual shares from the Zimbabwean register, however, comes at a time when the counter is trading at a huge premium on the ZSE than its prices on both the JSE and the LSE. As of Thursday, Old Mutual was trading at $7,85 but $3,20 on the JSE and $3,19 on the LSE.
But investors, struggling to get money out of Zimbabwe, have foregone the premium and are now transferring shares to be sold on the JSE and the LSE register.
In February 2018, a total 1 860 068 shares were also transferred from the Zimbabwean register. On the 29th of May 2018, a total 732,424 ordinary shares were transferred from the ZSE to the JSE and the LSE. This is in addition to 324 257 ordinary shares that were also transferred from the Zimbabwean register. Just this week a total 732 424 Old Mutual shares were transferred from the ZSE to JSE and LSE.
Other investors are, however, also using Old Mutual shares to bring funds into Zimbabwe. On the 8th of May, a total 463 680 Old Mutual shares were transferred to the ZSE register. This is in addition to more than 7 million shares that were brought in February this year.
Those bringing funds from the JSE to the ZSE will enjoy a 145 percent premium at current prices. This is opposed to making a direct transfer of funds into Zimbabwe.
