The performance of the ZSE over the last 12 months provided one of the rare pieces of good news for Zimbabwean businesses and the economy. So much so that it has to be questioned. While it’s not my desire to rain on a party it’s important that we understand how companies on the verge of shut downs and beset with a multiplicity of problems that affect  their daily operations can have shares rallying in a never ending bull market.

The ZSE values are of course not entirely reflective of all factors on the ground. The introduction of the bond note (& RTGS balances) to the multi currency system caused a monetary inflation effect. In essence money supply was increased and as those laws of supply and demand mandate something had to give. So to go with our increased ZSE values we saw increased inflation.


I wrote another article detailing how the ZSE is not a good inflation hedge an index. Noting that overall the ZSE moves in a line that is parallel to and consistently under the inflation rate. In layman’s terms the asset values are just as inflated as the prices on the street.

S&P DJI dropped Zimbabwean shares

The S&P DJI chose to stop tracking Zimbabwe domiciled shares on its indices citing the lack of reliability of the values being realised on the ZSE. This was of course compounded by foreign currency shortages which effectively mean companies face difficulty in honouring obligations to foreign investors such as in the Delta case.

Old Mutual Implied Rate OMIR

The Old Mutual Implied Rate is a measure that has been used since the Zimbabwean dollar era to approximate an exchange rate between the Pound Sterling and Zimbabwean dollar. It regained importance when the introduction of the bond note resulted in distortions in value. Old Mutual shares are listed on ZSE and London  Stock Exchange simultaneously. So even when there is no clear exchange rate we can imply the rate based on the values of OM shares on both exchanges. Does that make sense?  Let’s illustrate;

10th January 2019

Old Mutual London Stock Exchange closing price was 129.56

Old Mutual Zimbabwe Stock Exchange closing price was 640.56

The Pound Sterling to US dollar exchange rate stood at 1.28

129.56*1.28=165.8368 to arrive at a US dollar value of OMLSE


Now that we understand OMIR let’s look at some important figures on our stock exchange through the OMIR lens. According to the OMIR for the 10th of January was quoted at 4.3225. A little higher than our illustration but the website does state it is indicative only. We shall work with this figure going forward.

Market Capitalization

Currently the market capitalization of the ZSE is quoted at over $18 billion. If we apply OMIR to that we get;

18886310641/4.3225 = 4369302636

The real market cap is $4,37 billion, clearly not quite the flattering figure nominally presented.

The Cassava introduction

On its introduction Cassava smartech vaulted to a market capitalization of 3.8 billion. Let’s apply the OMIR to this.

3800000000/4.3225= 879120879.

This places Cassava at a valuation of just under US$900 million. Impressive still as an introduction but not the figure we were given. There were already sections calling Cassava a unicorn based on its introduction valuation. Impressive still given the state of our economy.

Difference with exchange rate

Observant eyes may have noticed there’s a marked difference between the OMIR and the alternative market rates. The graph below shows the relationship between the two.

Image from ZimBollarIndex

The OMIR is an approximation based on market quotes. The alternative market exchange rate considers other factors in pricing that influence the rate. One such factor is the need for Bonds/RTGS for certain types of transactions. Another such issue would be the tendency of human beings to want to take advantage of the rate differences. So the market exchange rate while not equal to OMIR is closely linked to it.

While our government holds on to the parity between US dollars and bonds the market has long been of a different opinion. Without an official exchange rate investors still need information that is a fair reflection of value given our currency issues. gives the value of ZSE shares using the OMIR.

The bond and RTGS values are simply nominal values at this point with the real value unit in our economy being the US dollar. While share prices reflect growth and great returns the inflation problem and the money valuation problem paint a much more sobering picture.