‘Pension funds affected by Old Mutual, PPC’

ZIMBABWE’S insurance and pensions regulator has called for the expedient resolution of the re-listing and fungibility of Old Mutual and PPC’s shares. The two companies’ shares, along with Seed-Co International, had their shares suspended last year as Government suspended trading on the ZSE over the fungibility of the multi-listed companies over proxy exchange rates (for example, the so-called Old Mutual Implied Rate) implied by their prices on foreign bourses such as the London Stock Exchange.

But although Seed-Co’ International’s shares were listed on the Victoria Falls Stock Exchange (VFEX), the Insurance and Pensions Commission (IPEC) says the issue of Old Mutual and PPC needs a quick resolution as several local pension funds have their monies tied up in these two companies.

“The delay in listing and removing fungibility of Old Mutual and PPC shares is of concern to the industry as it affects the determination of asset values of pension fund members and policyholders currently tied in the two counters,” said IPEC in its pensions report for the third quarter to September 30, 2020.

IPEC said last year’s suspension of the local bourse has had a negative impact on the insurance and pensions sector’s equity holdings.

“As a result of the suspension of trade on the ZSE, market capitalisation level was affected as it declined from $219.16 billion recorded on 26 June 2020 before the suspension of trade to $179.50 billion by 28 August 2020.

“Though market capitalisation improved to $206.50 billion as at 30 September 2020, it was 5.6 percent lower than the June level.”

Currently, 28 percent of pension funds’ assets are on the equities market. And over the period under review, the sector continued to increase its equities investment portfolio.

“The value of investments in quoted equities increased by 706.47 percent from $3.71 billion as at 30 September 2019, to $29.92 billion as at 30 September 2020 notwithstanding suspension of trades of some major counters on the Zimbabwe Stock Exchange,” noted the regulator.

Although Seed-Co International remains the only stock listed on the VFEX, it is expected that the United States-denominated bourse will provide relief to Old Mutual and PPC investors when these companies eventually list.

VFEX will also provide a new investment platform for the country’s insurance and pensions firms, who are actively seeking US dollar assets to invest in following the promulgation in November of Statutory Instrument 280 of 2020, which allows these companies to carry out business in foreign currency.

Said Risk and Investment Management Consulting Actuaries (RIMCA) director Gandy Gandidzanwa:

“Pension funds can take advantage of the newly established Victoria Falls Stock Exchange by listing their property holding as a property fund,” he said.

“They need not float all of it, say 40 percent maximum. This generates immediate liquidity in the fund, and is also a potential source for offshore investment.”