By Dumisani Dlodlo
THE much-awaited Victoria Falls Stock Exchange which will permit investors to trade in foreign currency, including regional stock and shares, is expected to attract significant external investment, economist, Eddie Cross has said.
Cross made the remarks in a recent interview with London-based world news channel, AriseNews.
“The problem here is that internationally people find it very difficult to invest in the Zimbabwe stock market if they cannot get their money out. They cannot sell their share, make a profit and move their money out of the country and that’s has been a problem for many years.
“We have strict controls over capital movements and that remains in place today. So what they are doing is they are opening stock Market in Victoria Falls where people can trade in US dollars and trade in regional stock and shares and I think it’s a good idea. It will attract quite significant external investment,” explained Cross.
He added: “There will be no controls over the movement of money in and out. It is in the special economic zones and I think it is going to be supported by a quite range of financial services. So I think it’s an experiment worthy looking at.”
Cross also revealed that the suspended trio of Old Mutual Zimbabwe, SeedCo and PPC were in negotiations with Government to trade in the Victoria Falls bourse.
“The directors and management of the three companies have been negotiating with Government and are now considering listing on this new Victoria Falls bourse which is just being established,” he said.
Cross went on to give a detailed background that led to the temporary suspension of the ZSE by the regulatory authorities on 28 June this year.
“Zimbabwean economy is under significant pressure at the moment from lack of confidence in the economy and in the local currency and this has been buoyed by the rapid depreciation of the currency in the last 12 months and leading the pack was the three stocks on the local market that’s PPC, Sedco and the Old Mutual.
“These three stocks are quoted in London and in South Africa and in Zimbabwe. And they are fungible, in other words, you can buy the stocks here and you can move out of the country and sell the shares in South Africa or London and get your money out of the country.
“And with people rushing out for the exit trying to get the money out of the country at any cost the Old Mutual Rate reached to 135 to 1. And it was at that point that the authorities stepped in and initially closed down the entire stock market and now they have allowed the stock market to come back. It came back … with these three shares suspended,” Mr Cross said.
Finance Minister Mthuli Ncube is on record saying the designation of Victoria Falls as an international finance centre (IFC) will provide the industry with additional opportunities to hedge foreign currency denominated products.