African Investor Relations

The Nairobi Stock Exchange sells a broad array of data and generates close to US$100,000 a year from this activity which accounts for approximately 2.5% of total revenues. There are 7 authorised data vendors whose deposits held at the NSE total about US$8,500. These data vendors re-package the NSE data into products and services that theoretically “add-value” to the users thereof. Data vendors in most cases re-charge for this data or package it in a way that they are able to generate revenues therefrom eg portal sites, that generate advertising revenues by virtue of their website traffic.

For the larger media firms such as Thompson Reuters and Bloomberg the value add to investors is significant as the data is bundled into global databases and other products.

There is a bigger question here for the NSE and that’s whether the foregone benefits of wider information dissemination exceed US$100,000 of revenue every year? “A bird in the hand is worth two in the bush”? At the moment it would seem that its easier to justify the 100-grand-in-the-hand. Is the NSE rent seeking from data that it should not be?

The products below show what you can buy – you can buy this information from the NSE using your cell phone! Which IS progressive, but is it really necessary? As a shareholder or an active investor, is it acceptable for me to pay for basic investment data? How many people does NSE have to sell to, to add to the “bottom line” and is the “bottom line” becoming more and more important for the NSE now that it is de-mutualising? Are the long term interests of Kenya’s capital markets being prejudiced by virtue of the fact that the  NSE is a monopoly on investment data and is selling it?

An alternative view is that this investment data should only be consumed by those that understand it and can afford it and through registered investment professionals i.e brokers. Yes, there are the ignoramus investors out there being misguided all the time as a result of their ignorance, but that’s the nature of the industry (look at World markets and they are supposed to be filled with educated people). From a regulators perspective, one could argue that  no-one really understands the markets so who cares? My retort to this response is consider the power of 4 million ignoramuses (those with access to internet in Kenya and with shares but no knowledge) being misguided by their ignorance and able to express this ignorance on a global platform 24/7. Phew!! An example? IPOs whose share prices rocket to stratospheric levels and then collapse: no shortage of evidence of this in Kenya.

Is this sort of ignoramus behaviour acceptable to the regulators whose core obligation is to protect investors?  ”An informed investor is a protected investor” I believe.

Whether African regulators like it or not, the growth of social media is changing the landscape for everyone. Social media is full of ignoramuses. In the absence of wide and engaging education efforts by the regulators (now) there is significant scope for the ignoramus market to completely dominate (over-positively or over-negatively) the general public’s perception. In that situation the regulator can’t do anything its too late. So they have to be pre-emptive. One could argue that the listed companies should bear some responsibility for educating investors and enabling them to make informed investment decisions – but that’s a different conversation.

My view is this:-

- the NSE should review the products below and make free the ones that are not well subscribed. Charge the top data vendors for the value add data / systems / feeds. Don’t charge for anything else (the basic products) but make it freely available to anyone who wants to sign up.

- engage the market as widely as possible with an online shareholder education course (linked to social media) – charge US$20 for it (enable payment by M-Pesa) and if you get 3,000 people signing up then that’s US$60,000 of the US$100,000 that you might have forgone above. Investors become more “informed” and “protected”. These education initiatives deal specifically with irrational exuberance in IPO situations and ignoramuses are learning things rather than buying data.

There’s a degree of intuition needed here in deciding the way forward for the NSE and I don’t have the stats to be able to say much more. The fact is that they have been selling data now for some time and know what the market does and doesn’t want. They need to reflect on this and amend their strategy to achieve both objectives.

Why is this relevant?

Well with the World melting at the moment, with Africa being seen as the last investment frontier, and with foreign investment at risk, there should not be any barriers to getting hold of timely information. The bigger picture is that the way the web is developing, all of this information is going to be available for free anyway in the future to almost everyone, by phone,iPad, PC, whatever and its only the likes of Thompson Reuters and Bloombergs that can justify the need to pay to re-package packaged real time data on account of their professional investor bases.

All of this debate is all so terribly over-intellectual isn’t it?

BUT, ask yourself whether 10 years ago you would have predicted that so much information and functionality could be available on the web FOR FREE. So really at the end of the day the future for African capital markets is whether the regulators that run them have a vision, a long term vision that embraces how the web is changing the world. A vision that does not involve US$100,000 now, vs benefits that are intangible and in the future and for the greater good. Like investor education. Mmmmm….

Daily FIX Log File (flf)Contains all the day’s trading activity (both equity and debt) in electronic form.	Kshs.50000(monthly subscription)+/- US$6,480 p.a.
End of Day Listed Equity Securities Data (eded)Listed equity data, which is published no sooner than sixty (60) minutes after the close of trade on each trading day.Available in excel format	Kshs.7200(monthly subscription)+/- US$936 p.a.
Historical daily Price lists for bond data (hdpl-bond-market)Historical daily market reports for equity and debt data. Available in excel format.Data Available From 24th Feb 2011 to 13th Oct 2011	Kshs.30(per day’s price list)+/-US$71 p.a.
End of Day Listed Debt Securities Data (eddd)Listed debt data, which is published no sooner than sixty (60) minutes after the close of trade on each trading day. Available in excel format	Kshs.7200(monthly subscription)+/- US$940 p.a.
Historical daily Price lists for equity data (hdpl-equity-market)Historical daily market reports for equity and debt data. Available in excel format.Data Available From 4th Jan 2010 to 13th Oct 2011	Kshs.30(per day’s price list)+/- US$71 p.a.
Historical weekly Price lists for equity data – weekly market statistics (hwpl-equity-market)Historical weekly market reports for equity and debt data. Available in excel formatData Available From 4th Jan 2010 to 16th Sep 2011	Kshs.100(per weekly report)+/- US$56 p.a.
Historical weekly Price lists for debt data – weekly bond statistics (hwpl-bond-market)Historical weekly market reports for equity and debt data. Available in excel formatData Available From 4th Jan 2010 to 2nd Sep 2011	Kshs.100(Per weekly report)+/- US$56 p.a.
Historical monthly trading equity volumes (hmev)Historical trading volumes per month in excel formatData Available From 2010 to 2010	Kshs.1000(cost per annum)+/- US$11 p.a.
Historical monthly trading equity deals (hmed)Historical equity traded deals per month in excel formatCurrently No Files	Kshs.1000(cost per annum)+/- US$11 p.a.
Historical monthly trading equity turnovers (hmet)Historical equity traded turnover per month in excel formatCurrently No Files	Kshs.1000(cost per annum)+/- US$11 p.a.
Historical monthly debt traded deals (hmdd)Historical debt traded deals per month in excel formatCurrently No Files	Kshs.1000(cost per annum)+/- US$11 p.a.
Historical monthly debt traded volume/turnovers (hmdv)Historical debt traded volume/turnover per month in excel formatCurrently No Files	Kshs.1000(cost per annum)+/- US$11 p.a.
Historical monthly foreign investors trading data (hfid)Historical monthly trading summary of foreign investors. Information consists: purchases, sales, total turnover, percentage to total equity market turnoverAvailable in excel format.Data Available From 2009 to 2010	Kshs.3000(cost per annum)+/- US$33 p.a.
Historical Annual equity turnovers (historical-annual-equity-turnovers)Historical equity traded turnover per year in excel formatData Available From 1992 to 2011	Kshs.1000(cost per annum)+/- US$11 p.a.

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AfricanSENS.com is a portal with a specific purpose; we want to ensure that every hardcopy and every softcopy corporate announcement in a number of markets can be released the same day through a single channel for free.

Initially our focus is on providing 100% coverage of listed companies’ corporate announcements in Zimbabwe and hopefully be extended to Zambia, Botswana, Kenya and Malawi.

Access to the portal is free and is RSS enabled. Users of the site can receive corporate action alerts in their email as soon as they are published online on www.africansens.com. We are currently unable to publish 100% of the content we receive online in full (we publish abridged information), however users will notice however that African Is Cool clients’ corporate action material will appear online in Africansens in full or at least a link thereto will be available.

From an online investor relations perspective, this www.africansens.com initiative complements the many others that we have to get our clients’ message out to the broader investment community. We have two twitter accounts: www.twitter.com/africafinancial and www.twitter.com/africaniscool to complement this.

I am interested to hear your feedback. We expect www.africansens.com to grow into a really meaningful portal.

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Trying to get hold of Nigerian capital markets information is difficult – there is just so little free information out there available on a broad, immediate and non-exclusionary basis. The market is split into two – those that can afford US$120 a year and those that can’t. The millions earned by the NSE (I tried to insert a link but the website was down) have not been ploughed back into shareholder and regulator education programmes so the typical Nigerian retail investor (and regulator) lives in fear and emotional expectation.

Trying to call a Nigerian company, look at Nigerian company disclosures or speak to Nigerians in general is  difficult. I think they all hide from the 152m other Nigerians out there so it probably makes sense. Except from an investor relations perspective. That said it’s been interesting to see that more information has been disclosed on the Nigerian Stock Exchange website after the controversy surrounding the SEC and the CEO of the NSE

We do not have these communication problems with executives in other countries.  The Nigerian inward looking attitude is unhealthy and hopefully a new spirit of transparency and improved information availability is being introduced by the NSE. It should actually be introduced by the listed companies but that’s another story.

There are over 33 million internet users in Nigeria and about 11 million shareholders. The identity of those shareholders (who are also consumers….. are ignored on purpose – they are shareholders, “a pain in the neck”, or too much hassle to deal with). On the other side of the coin, the Nigerian market is filled with millions of potential customers and millions are spent on trying to find out who these people are so that products and services can be pitched to them.

So, on the one hand Nigerian companies have 11 million shareholders whose identity they know but don’t want to know, and then another +11 million potential customers whose identity they don’t know but want to know. Not a single Nigerian listed company has embarked upon a retail shareholder strategy in order to enhance brand and corporate reputation. But they all spend thousands of dollars a month on billboards trying to get people to notice them. Their websites sit lonely and poorly populated.

This is how to sign up for Nigerian market information:-

go to www.nigerianstockexchange.com
fill the registration form by the right hand side of the site you will see unregistered click here? then pay to any of our banks and then scan and send helen evidence on hcifeacho@nigerianstockexchange.biz or call 08058800511.

Congratulations! Your request has been received and our Subscriber database has been updated. However, it may require up to 24 hours for your account to be activated and for all your credentials to be verified if  necessary. Also note that  the Exchange reserves the right to accept or turn down requests based on its investigation of your identity.

Also note that access to the system attracts these applicable fees;

Individual Investors => N 18,000 per/annum (approx US$120)
Institutional Investors => N 60,000 per/annum (approx US$300
Stock Brokers => N 45,000 per/annum (approx US$400)

Please pay to the following accounts:

Residents:
The Nigerian Stock Exchange
A/C No: 2442030000255
First Bank of Nigeria Plc.
Stock Exchange House Branch, Lagos

OR The Nigerian Stock Exchange
A/C No: 2111212310
Sterling Bank.
Broad street, Lagos

Non-Residents:
Domiciliary A/C No. USD 0153518030
CitiBank Nigeria
1, Idowu Taylor Street
Victoria Island, Lagos

Users may contact The Exchange (nse@nigerianstockexchange.biz or hcifeacho@nigerianstockexchange.biz) or call us on 234-1-2660305, 234-1-2660335 for any further clarifications.

The Exchange advises that your user name/password combination  should be kept secretly as it does not take responsibility for any leakage. The System however allows you to change your profile at will.

Thanks and enjoy your stay…

The information above is not a scam!! Its published on the Nigerian Stock Exchange Website.

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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.

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As our population of annual reports on africanfinancials.com grows (2,268 at the last count), so does the opportunity to carry out research on a broad array of African companies. Long-term research. The Intelligent Investor, by Benjamin Graham and updated commentary by Jason Zweig should be a bible for anyone interested in investing in Africa. One of Benjamin Graham’s insights is

“the investor who permits himself to be stampeded or duly worried by unjustified market declines in his holdings is perversely transforming his basic advantage into a basic disadvantage”.

Zweig points out the Graham’s basic advantage is the full freedom to think for your self in whether to follow the market or not. To have this independence though you need information.

There are 1,500 listed companies in Africa and Africanfinancials.com seeks to put the last 10 years annual reports of each of these online. Call it 15,000 in total.  We have just over 2,200 annual reports online. We have made reasonable efforts to do this, with some success, but it’s clear that the information is just not there. Using the annual report as an investment bible proxy less than 15% of the information that should be available online is online.

Is there a single organisation that has correlated the long term earnings of listed companies in Africa? Not sure. Perhaps the likes of Thompson Reuters and Bloombergs have and to be sure this information is not readily available in market at low cost. Hard to find information is valuable because you can charge for it. Stock exchanges are natural repositories for this sort of data and making this available to the market is, in my mind, one their basic obligations. But alas this is not to be.

When asked what keeps most individual investors from succeeding, Graham had a concise answer:

“The primary cause of failure is that they pay too much attention to what the stock market is doing currently”.

This is all very well, but when finding out what they (African companies) did in the past 3 – 5 let alone the last 10 years is not possible investors are left to concentrate on market sentiment and what the stock market is doing currently. Africanfinancials.com is slowly addressing this enabling investors to access information that they can digest themselves with or without the influence of others.

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It’s Friday 5-oopm. Our clients’ websites have not been updated because we do not have the prices and volumes of trades today. Brokers that traded online this morning know what the prices are, but haven’t published them on their websites, or distributed them by email. We don’t know the prices. The Luse website only shows prices and not volumes, only half the story.

“The Lusaka Stock Exchange has been set up as a modern stock exchange based on the most current international standards and practices.” LuSE website

Doesn’t matter because it’s Friday? That’s not the point. How can an electronic trading system NOT get out the prices as soon as trading is complete? Read the mission statement of the LuSE and the principles of information being the lifeblood of markets.

Please may we have the prices and volumes as soon as trading closes LuSE? It’s a most current international standard and practice.

OK I will let you have the 15 minute delay.

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Stock exchanges in most countries are in a unique position: they are monopolies in the supply of trading data. They add value to that data, package it and distribute it real time and in other forms etc. for a fee. Fair enough. But what about the basic information that an exchange should make publicly available, daily, for free, in an easily accessible format? Try accessing a market capitalization report (shares in issue X share price) on any particular day in any of the African markets. The information does not exist other than through a broker. Even then with brokers there’s no assurance that the information will be given to you.

My question. If there were to be minimum data on a particular day made available freely by stock exchanges would it be the following:-

• Status of listed companies – suspended etc.
• Share price
• Corporate actions
• Indices
• Shares in issue
• Volume traded
• Corporate announcements

I am talking here of the most simplistic availability of core data. I realise that if this data is to be processed and value added there is scope for the exchange to be compensated for this.

Many African stock exchanges need to formalize their information dissemination practices and it would be useful to have a good practice template through which the IR fraternity can judge them.

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