Old Mutual should be delisted and moved to another exchange that trades only in US dollars, Patrick Chinamasa, the acting spokesman for the ruling Zimbabwe African National Union-Patriotic Front, said on Tuesday.
"Setting up a foreign-exchange denominated stock exchange is an appropriate institution for raising and attracting foreign direct investment," he said. Details of how this needs to be done will be left to the government, but should be done in the shortest possible time to "avoid undue disruption to inflows of investment capital."
Zanu-PF wants to stop the use of the Old Mutual Implied Rate, a gauge used by domestic companies to determine the future cost of goods and services. It's calculated by using differences between the insurer's share price in London, Johannesburg and Harare.
"The Old Mutual story is a classic case of mistaking the symptom of a problem for its cause,"said RenCap's Robertson. "Investors have been able to justify investments in Zimbabwe by using the Old Mutual Implied Rate as a basis for valuing those investments. Without it, the investment case is cut away."