Zimbabwe’s official exchange rate and equity prices do not reflect reality, the Cape Town-based firm says
Money manager Allan Gray has slashed the valuations for Zimbabwean stocks in its African fund by 45% after turmoil that saw theZimbabwe’s official exchange rate and equity prices don’t reflect reality, the Cape Town-based firm said in commentary provided to investors. At the end of June, 17% of the $189 million Allan Gray Africa Equity Fund was held in Zimbabwean stocks, the largest proportion after Nigeria and SA, based on country of primary listing.
The government closed the Zimbabwe Stock Exchange on June 28 as part of an effort to stabilise the local currency. The ruling party has since demanded the listing of Old Mutual, the biggest company by market value, be terminated because the insurer’s share price is used to determine a future rate for the Zimbabwean dollar.
“The recent pronouncements around closing the stock exchange, banning mobile money and ‘ejecting’ Old Mutual are movements in the wrong direction and we remain concerned about the economic situation on the ground,” Kutisker-Jacobson said. “It is becoming increasingly difficult for corporates within Zimbabwe to access FX markets and continue to operate.”
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