African Stock Exchanges

Stock investors around the world, for your investments in stocks this year, choose Africa and you are guaranteed of gigantic returns. But since Africa is regularly presented as an unpredictable continent for investments, it is in an unexpected stock exchange that any investments will yield fat returns. This simply means that, some how; there is an element of truth in the perception of the continent by Africans and none Africans. And which is this stock market in Africa that all her investors are smiling to the bank? It is the Harare Stock Exchange in Zimbabwe of all places. Even though there are stock exchanges in Africa , wherein trading/transactions are carried out like in any other stock market in the world, many Africans and foreigners do not know such exist on the continent.  This is partly the fault of the management of those stock exchanges and the governments of countries wherein there are located.

Although emerging markets becoming assertive and robust in returns, it is not known how many investors have thought of investing in African stock Exchanges, besides the Johannesburg Stock Exchange JSE in South Africa . What is certain are that, most none African and even some African investors prefer Asia for the maturity of some her markets. But it would be best for all those investing in Asian stock exchanges to start giving African markets some serious patronage. Not as a sign of leaving Asian stocks because burst looms, even though still far, but more as diversification in other to be able to absorb effectively any shocks or burst. For it is always not wise to put all your eggs in a single basket.

 Growing credibility of African stock markets 

As already stated, all investors who have snubbed African markets have committed errors that can nonetheless be remedied. This is so because, it is easier to invest in African stocks and more African stocks do yield high dividends. African stocks may not have the hypes of those of other parts of the world, but on the African continent, there is the JSE that is ranked 17^th in the world. The other African stock exchange registering successes is the Casablanca Stock Exchange of Morocco . According to Fortune magazine N° 23 of January 15^th 2007, the Casablanca stock exchange was ranked sixth best performing market in 2006 with a 92.00% return on investment. According to the Nigerian Business day newspaper quoting from Dr. Charles C. Soludo, the director of the Nigerian Central Bank, this year 2007, the Nigerian Stock Exchange NSE based in Lagos , will hit an all time high capitalisation of $ 70 billion.

The amount is double the foreign reserve of Nigeria , Africa ’s second largest economy. Banking and Telecommunications sub-sectors are the high yielding stocks on the floor of the Nigerian stock exchange. Another reason to invest in African stocks is that, they are growing in credibility and are attracting national and international investors. The recent IPOs of Transcorp International and Dangote Sugar Refinery at the Nigerian Stock Exchange attracted investors within and without Nigeria . However, the patronage of African markets besides the JSE in South Africa is still low.

Hence in 1993, the African Securities Exchanges Association was formed. It based in Nairobi , Kenya and headed by Mr Maged Shawky who doubles as the head of the Cairo and Alexandria Stock Exchanges in Egypt . The African Securities Exchanges Association abbreviated ASEA is a non profit organisation guaranteed by Kenyan law. ASEA aims to establish systematic mutual cooperation, exchange of information as well as to harmonise market standards, in order to enable members to attain greater roles in the competitive global market environment.

 Membership

Members of the ASEA are: the Abidjan stock Exchange, based in Abidjan, Ivory coast (she covers or represents six French-speaking West African countries), the Bond Exchange of South Africa, Botswana Stock Exchange, based in Gaboronne, Botswana, Cairo and Alexandria Stock Exchanges of Egypt, Casablanca stock Exchange of Morocco, the Dar es Salam Stock Exchange in Tanzania, the Ghana Stock Exchange, based in Accra, Ghana and the Johannesburg Stock Exchange (JSE) in South Africa.

Others are: the Lusaka Stock Exchange, based in Lusaka, Zambia, the Malawi Stock Exchange, the Mozambique Stock Exchange, the Nairobi Stock Exchange in Kenya, Namibian Stock Exchange, the Stock Market of Mauritius, the Stock Market of Swaziland, the Nigerian Stock Exchange (NSE) based in Lagos, Nigeria, the Uganda Securities Exchange and the Zimbabwe Stock Exchange.  All in all, ASEA is made up of 19 members in 18 countries with her newest (2005) member being the Bourse des Valeur Mobiliers de L’Afrique Centrale (BVMAC) based in Libreville , Gabon . The Libreville stock exchange represents the six countries that make up a mini regional political body known as CEMAC*. Prospective members of ASEA are the Democratic Republic of Congo, Angola , Rwanda , Madagascar and Lesotho stock exchanges.

In a bid to work and operate smoothly, ASEA is in collaboration with the Kenya Institute of Public Policy Research and Analysis (KIPRA) and at present, three ASEA members: JSE limited, the Cairo and Alexandria stock exchanges, and the Stock Exchange of Mauritius have gained membership status of the World Federation Exchanges (WFE). This represents their compliance with international standards. On the trading front, members of ASEA registered impressive performances in 2005 with a total of 1468 companies listed, recording a total market capitalisation of $845 billion, which was a 28% growth over 2004.

 Brief history of some African stock markets

The history of the Cairo and Alexandria stock exchanges can be traced to the 19^th century when merchants of Alexandria met to cut deals, especially in Coffee. The Alexandria stock exchange was established in 1883 followed by the Cairo exchange in 1903. They merged between the 40s and 50s and were ranked 5^th in the world with 21 brokerage companies gravitating around both exchanges. However because of the socialist policies of the 60s of Gamal Abdul Nasser, the extinction of the exchanges was inevitable. Nevertheless, it was reactivated in 1992.

Casablanca stock exchange was founded on the 7^th of November 1902. Of her 107 or so of existence, the Casablanca exchange has undergone three major reforms. The first one was in 1948, when she acquired legal status and in 1967, she underwent another legal and technical reorganisation in the process, changed her legal status to become a public establishment. The third reforms were carried out in two phases, the first in1993 and the last in 1996.

The Johannesburg Stock Exchange (JSE) Limited was found on the 8^th of November 1887 a year after the feverish cries for Gold rang through Witwatersrand . She is ranked 17^th largest equity exchange in the world with a total capitalisation of R 302 trillion with approximately 400 companies listed. JSE is marginally smaller than the Stockholm Stock Exchange and larger than 9 stock exchanges classified as developed. Finally, the Nairobi Stock Exchange was found in 1951 by an estate agent called Francis Drummond who established the first professional stock broking firm in the country.

 Abbreviation:-

* CEMAC: stands for Economic and Monetary Community of Central African States. The mini regional organisation that has her own central bank with common currency: CFA Franc: is made up: Cameroon , Central African Republic , Chad , Congo , Gabon and Equatorial Guinea . For more information on trading and how to buy shares in African stock exchanges, please contact African securities exchanges association or log on to: www.africansea.org .

Robot  # 1 | 10.02.2007 22:57

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