Browsing: African Capital Markets

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A number of African stock exchanges have been hit by an IPO drought in recent years—an indicator of ineffective capital markets. Some exchanges have seen an increase in de-listings.  For instance, Ghana’s stock exchange is reported to have been struck by a wave of de-listings. The crux of the matter is, apart from the biggest stock exchanges, African capital markets have not lived up to their potential as investment harnessing hubs.

Stock Exchanges in Africa 

There are currently 29 exchanges in Africa; most of these are affiliated with the African Securities Exchanges Association. Included in the list of exchanges are two regional bourses. The Bourse Régionale des Valeurs Mobilières (BRVM) in Côte d’Ivoire which is an amalgamation of Benin, Burkina Faso, Guinea Bissau, Côte D’Ivoire, Mali, Niger, Senegal, and Togo.   The other is the Bourse Régionale Valeurs Mobilières D’afrique Centrale (BVMAC) which caters to Central African Republic, Chad, Democratic Republic

The second half period of 2020 has been marked with persistent bearish sentiment exacerbated by the financial performance amidst uncertainty in economic and business recovery in the pandemic era. On a year to date (YTD) basis, the NSE-20 and NASI have posted negative returns 34.2% and 22.2%, respectively. However, there have been outstanding performers that bucked the general market trend. Absa NewGold ETF (a security whose value is pegged on the value of global price of gold) is up 39.5%; Kenya Airways (+86.8%) on a buy-out fueled price rally; and Olympia Capital (+21.9%). The key index counters are all negative with the key banks (Equity, KCB and COOP) sharply lower, on average by 41% YTD while Safaricom and EABL have retreated 12.1% and 22.4% YTD, respectively.  

Also Read: Understanding Stock Market Liquidity in African Exchanges

The bearish market coupled with uncertainty around resolution of the Covid-19 pandemic, has shifted investors’