Our latest monthly reconciliation shows 1,652 listed companies in Africa:-
There is an article below that misses a number of points about African stock markets. It is so generic as to be meaningless. I have submitted my comments below the text of the article (forgive the acerbic tone):-
Africa has ‘too many bourses, too little liquidity’ , June 28, 2010, By Ellis Mnyandu
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Africa should consider rationalising the number of securities exchanges that are on the continent in order to boost the appeal of Africa’s markets as a viable investment destination.
THE ISSUE IS NOT THE NUMBER OF STOCK EXCHANGES BUT THE QUALITY OF THE EXCHANGES. YOU TRY TAKING AWAY A NATIONAL ASSET – THAT’S HOW THE MARKET WILL VIEW IT. THIS IS WHY THE AFRICAN STOCK EXCHANGES ASSOCIATION HAS NOT ACHIEVED ANYTHING AT ALL. THESE STOCK EXCHANGES ARE NOT CO-OPERATING FOR GOOD REASON. THEY HAVE NO NEED TO.
This view was expressed by Maria Ramos, the group chief executive of Absa – South Africa’s largest retail bank.
“I think we probably need to rationalise the number of stock exchanges on the continent,” she said during a panel discussion at the Fortune Global Forum in Cape Town. “We are currently sitting with 23. Looking at these markets there is not enough liquidity to sustain all of them.”
WHETHER OR NOT THEY ARE LISTED IN GABON OR JOHANNESBURG THE LIQUIDITY / FREE FLOAT WILL REMAIN THE SAME. YOU MAY SAY BUT ACCESS TO BIGGER BETTER MARKETS WILL ASSIST – THIS CAN BE ACHIEVED TO THE SAME EXTENT IN DOMESTIC MARKETS ALL IT NEEDS IS VISION AND MANAGEMENT. THE EXCHANGES WILL NOT BE SELF FUNDING – SO WHAT? NEITHER WILL THEY BE WHEN FOREIGN MARKETS EXTRACT THEIR RENTS.
Ramos said there had been an ongoing dialogue for quite some time about what needed to happen to integrate financial markets on the continent. But so far there had been no discernible steps to turn the dialogue into tangible real action.
DID SHE SAY WHY? THE BEST THING THAT THE JSE COULD DO IS OFFER A FREE INFO DISSEMINATION PLATFORM TO LISTED COMPANIES IN AFRICA – THIS WOULD BUILD A COMMUNITY AND ENABLE EXPERIENCES IN THIS AREAS TO BE GLEANED OVER A NUMBER OF YEARS. THEN THE ISSUE SHOULD BE REVISITED.
The call for integration comes at a time when developing markets are under the spotlight as the global financial crisis pushes investors to look for investment returns elsewhere to offset sluggish returns in the slow-growing developed world.
Developed economies like the US and Europe have bore the brunt of the global financial crisis, putting developing economies such as South Africa, Brazil, China and India on investors’ radar screens.
But a key hurdle for investors looking to put money into Africa is the continent’s disparate securities exchanges, some of which barely see meaningful trading in each of the days that they are operating due to a lack of liquidity. MANY LISTED COMPANIES SHOULD NOT BE LISTED – THE FAULT OF THE REGULATORS HERE. EITHER YOU HAVE A PROPER MARKET OR NONE AT ALL.
Although an integrated operational framework might bring such benefits as transparency for investors (IMPLICITLY AGREEING THAT THE INFORMATION DISSEMINATION PRACTICES OF THE EXISTING EXCHANGES ARE POOR), a key challenge might come from regulation.
There would also be an issue of regional harmonisation – bringing east Africa, southern Africa, west Africa and north African bourses under a single framework. Currently some exchanges have tended to band together by each region.POLITICS – WHY DO PEOPLE CONTINUE TO FLOG THIS HORSE? A FRAMEWORK OF WHAT – REGULATION SETTLEMENT, INFORMATION DISSEMINATION?
Trade and Industry Minister Rob Davies echoed the call for integration, noting that Africa had rather small domestic markets in individual countries. There was a long-standing observation that there was a larger potential with markets that had groups of countries behind them, he said on the sidelines of the forum. RHETORIC REGURGITATED FROM THE PREVIOUS 10 YEARS EXPERIENCE. LETS COME UP WITH SOMETHING NEW! DEAR MALAWI – YOU HAVE A “RATHER SMALL” MARKET!!
“The debate is about how we get there,” Davies said. THE DEBATE IS ABOUT HOW WE MAKE MARKETS MORE LIQUID:-
- BETTER REGULATION
- BETTER SHAREHOLDER EDUCATION
- DE-LIST NON-COMPLIANT SHARES
- BETTER INFORMATION DISSEMINATION
In South Africa the JSE Limited operates Africa’s largest bourse, the Johannesburg Stock Exchange, which is among the top 20 securities exchanges in the world and its size dwarfs that of other African bourses such as those of Malawi, Libya and Mauritius.
INTERESTING INSIGHT HERE
The 11th annual Fortune Global Forum, which ends today, brought together heads of state, ministers, and the chief executives of the world’s biggest companies to discuss business, economic and social opportunities arising from the increasing role of emerging markets in the global economy.
It is the first time that the forum has been held in Africa.