It is still possible to find open outcry stock exchanges in Africa but not
for much longer. While the continent was the last of the world’s regions to make
the switch from traditional to modern trading platforms, that process has been
gathering momentum in recent years. More than a dozen of Africa’s 20 national
and regional stock exchanges have now made the transition, while those that have
not are planning to do so.
The leading African exchanges, notably the Johannesburg Stock Exchange
(JSE) in South Africa, the Cairo-Alexandra exchange in Egypt, the Casablanca
exchange in Morocco, and the Nigerian exchange in Lagos all made the transition
around the turn of the millennium, thereby joining the trend towards electronic
trading which is now the norm across the developing world from China to Brazil.
But much of the rest of Africa had been slow to catch up.
(JSE) in South Africa, the Cairo-Alexandra exchange in Egypt, the Casablanca
exchange in Morocco, and the Nigerian exchange in Lagos all made the transition
around the turn of the millennium, thereby joining the trend towards electronic
trading which is now the norm across the developing world from China to Brazil.
But much of the rest of Africa had been slow to catch up.
During the past few years, however, the gap between the trading
technologies being used by developed, emerging and frontier markets has been
contracting rapidly as Africa’s more peripheral exchanges have sought to
modernise their antiquated stock exchanges. Since 2008, Zambia, Ghana, and
Uganda have introduced electronic trading systems, joining Mauritius, Botswana,
Namibia et al who made the move a few years earlier.
technologies being used by developed, emerging and frontier markets has been
contracting rapidly as Africa’s more peripheral exchanges have sought to
modernise their antiquated stock exchanges. Since 2008, Zambia, Ghana, and
Uganda have introduced electronic trading systems, joining Mauritius, Botswana,
Namibia et al who made the move a few years earlier.
The Ivory Coast-based Bourse Regionale des Valeurs Mobiliers (BRVM), which
serves the eight members of the West African Monetary Union – the world’s first
regional stock exchange – is now entirely electronic. The five member East
African Community is currently upgrading its national trading systems to ensure
regional compatibility, while the new Angolan exchange (BVA) will offer
investors access to ten listed companies in the vanguard of the national
reconstruction effort.
serves the eight members of the West African Monetary Union – the world’s first
regional stock exchange – is now entirely electronic. The five member East
African Community is currently upgrading its national trading systems to ensure
regional compatibility, while the new Angolan exchange (BVA) will offer
investors access to ten listed companies in the vanguard of the national
reconstruction effort.
The arrival of the new African stock indices, notably the Africa investor
Ai Africa Blue Chip Index, the Nex-Rubica Top 40 Index, and Renaissance
Capital’s RC SSA 50 Index, has greatly augmented international awareness of
African blue chip companies among international fund managers and other
investors, which simply did not exist five years ago.
Ai Africa Blue Chip Index, the Nex-Rubica Top 40 Index, and Renaissance
Capital’s RC SSA 50 Index, has greatly augmented international awareness of
African blue chip companies among international fund managers and other
investors, which simply did not exist five years ago.
This in turn has helped generate foreign investor interest and appetite in
the new African regional investment funds, such as Investec’s Pan Africa Fund,
and Coronation Fund Managers’s Africa Fund and Africa Frontiers Fund.
the new African regional investment funds, such as Investec’s Pan Africa Fund,
and Coronation Fund Managers’s Africa Fund and Africa Frontiers Fund.
But the proliferation of electronic trading systems among African stock
exchanges has also enabled the establishment of new linkages between developed,
emerging and frontier market stock exchanges. The creation of the Marco Polo
Network, a broker network established in 2000 by a group of Wall Street global
capital market specialists, has helped to develop ties between developed,
emerging and frontier markets on six continents.
exchanges has also enabled the establishment of new linkages between developed,
emerging and frontier market stock exchanges. The creation of the Marco Polo
Network, a broker network established in 2000 by a group of Wall Street global
capital market specialists, has helped to develop ties between developed,
emerging and frontier markets on six continents.
The Marco Polo Network currently has a presence in five African countries –
South Africa, Egypt, Morocco, Nigeria and Kenya – and is now seeking to expand
into other African countries as a result of the efficiency gains that the new
electronic trading technologies adopted by African exchanges currently
offer.
South Africa, Egypt, Morocco, Nigeria and Kenya – and is now seeking to expand
into other African countries as a result of the efficiency gains that the new
electronic trading technologies adopted by African exchanges currently
offer.
The high cost of executing trades had traditionally been a barrier to
operating in African markets. Electronic trading has since transformed that
equation.
operating in African markets. Electronic trading has since transformed that
equation.
Trade volumes and values on most African exchanges had been rising
year-on-year for much of the decade prior to the Lehman Brothers collapse in
September 2008. In the immediate aftermath of the crisis, most African equity
markets dropped precipitately – down 50-70 percent in some cases.
year-on-year for much of the decade prior to the Lehman Brothers collapse in
September 2008. In the immediate aftermath of the crisis, most African equity
markets dropped precipitately – down 50-70 percent in some cases.
But African fundamentals remained intact. Signs of a recovery are now
clearly evident, and with African growth rates expected to exceed those in most
other regions of the world, African exchanges are bracing themselves for a new
surge of foreign investor interest in African frontier markets.
clearly evident, and with African growth rates expected to exceed those in most
other regions of the world, African exchanges are bracing themselves for a new
surge of foreign investor interest in African frontier markets.
