Foreign investors grab FMHL and Old Mutual shares

HARARE - Foreign investors were net buyers of $300 000 worth of shares on the local bourse during the week ending August 10 according figures released by the Zimbabwe Stock Exchange (ZSE).

According to ZSE, foreign purchases accounted for $4,3 million worth of shares while sales amounted to $4,6 million during the week August 6 to 10.

First Mutual Holdings Limited (FMHL) dominated the net buys with shares worth $1,4 million.

It was followed by Old Mutual which accounted for $1 million.

The week under review saw the local bourse in mixed trading following the election results challenge which spilled into the Constitutional Court and is awaiting ruling today (Friday).

Globally, elections have shown to have an impact on the performance of stocks.

Markets respond better to elections whose outcomes are more predictable, as opposed to uncertainty.

In July Old Mutual accounted for net buys which amounted to $6,1 million while FML had $986 457.

The ZSE has since the beginning of the year largely driven by foreign investors, this is despite concerns to address the foreign payment problems to enable investors to easily repatriate investment proceeds to their preferred destination. Difficulties in moving funds out can make the country less attractive as an investment destination.

Interest in FML shares has been increasing after the Competition and Tariff Commission (CTC) approved a deal that would see the group acquiring NicozDiamond total issued share capital.

Last year, FMHL acquired an 80,92 percent stake in NicozDiamond in a deal worth about $17 3 million a process that will see NicozDiamond merge with Tristar Insurance Company (TIC) before it delists from the ZSE.

The 80,92 percent share acquisition will see the operations of FML’s subsidiary, TIC which is a short term insurance company creating a single short-term insurance business with Nicoz Diamond.

While there have been fears that the acquisition would risk dragging the short term insurer into a shareholder dispute at FMHL, CTC approved the acquisition, classifying it as a horizontal merger.

The transaction was pushed by state-run pension fund, National Social Security Authority (Nssa) which is the majority shareholder in both FML (50,95 percent) and NicozDiamond (50,89 percent).

Nssa is the country’s biggest institutional investor with interests spanning across various sectors.It is currently restructuring its investment portfolio.

FML last month said it had lined-up strategies to back the Reserve Bank of Zimbabwe’s financial inclusion plan.

The country’s second largest life assurance company said it had noticed significant gaps in financial literacy and lack of risk mitigation knowledge across all social strata.

It said research had revealed that everyone required support to understand personal finance planning, including post retirement savings.

Interest in Old Mutual shares was attributed to the group’s breaking up of its vast financial empire into four strategic units.

Old Mutual returned to the ZSE in June this year after the parent company completed a restructuring process which ended its 19-year stint on the London Stock Exchange.

The financial group’s shares were listed on the Johannesburg Stock Exchange, with a secondary listing on the Zimbabwe, Nairobi and Malawi exchanges.

Old Mutual plc split the group into four independent businesses Old Mutual Emerging Markets, NedBank Group, Old Mutual Wealth and Old Mutual Asset Management as part of a strategy to unlock and create long-term value as well as removing the significant costs arising from the current structure following the introduction of bond notes in November 2016.

— The Financial Gazette

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