December 5th, 2013 by Tom Minney
ABIDJAN, COTE D’IVOIRE – The atmosphere was festive as Africa’s securities exchanges got together for the annual “must go” conference. Some 350 delegates from all over the world gathered at the atmospheric Hotel Sofitel Ivoire for 2 days of debate including 8 panels.
Prime Minister pledges support says exchanges should be innovative
Cote d’Ivoire Prime Minister Duncan Kablan Duncan came to open and close the panel, and he challenged the exchanges to come up with innovative solutions that would help finance Africa’s growth. He made clear that the conference theme “from progress to achievements” meant that Africa’s leaders expect a lot from the securities exchanges.
He pointed to the strong economic growth in Africa and its world beating economies, and said that this still hid a lot of challenges. Building the electricity and other infrastructure are among the challenges and African states do not have the right instruments yet to finance these through the capital markets.
He said governments and markets had to seek to remove constraints to growth, such as the overwhelmingly short-term nature of funding available and lack of finance for small and medium enterprises (SMEs), compounded by drastic reductions in development aid since the crisis. He pointed to giant achievements too, such as the creation of a common market in ECOWAS with 300 million people.
He told of Cote d’Ivoire’s own efforts to recover fast from a decade of destruction. He said growth was 9.8% in 2012, and is targeted for 8.7% in 2013 and 10% in 2014. He added that peace, security, reconciliation and cohesion were essential and hailed the success of the Committee of Dialogue and Reconstruction which “has contributed to the normalization of peace and the return of stability”.
The Prime Minister pledged a new emphasis on privatization after the previous round in the 1990s and progress on many regional projects including highways to Lagos, Ndjamena and Ouagadougou as well a railway to link six countries, airport and seaport expansion, the gas interconnect line and the West African Power Pool investments.
“We appeal to all parties, please increase your support and look for new initiatives that bring synergies. We need to improve the number of companies that are listed and the market capitalization many times by 2020. The market deserves to be supported at the regional level.”
He cited as good initiatives the fibre network and popularizing stock exchange activities.
He said that at the heart of the challenges for stock exchanges is the transformation of Africa, “our stock exchanges should be ambitious to bring the innovative solutions”
Other opening speakers included Sunil Benimadhu, President of the African Securities Exchanges Association, and Thierry Tanoh, CEO of Ecobank Transnational International.
Your editor had the honour of moderating 2 panel discussions
* Panel 1: “Why now and why African frontier markets?”, the panellists were Colin Bell (Head of Global Emerging Markets at leading stockbroker Auerbach Grayson), David Finch (Head of Portfolio Mangement at BNP Paribas) and Hubert Danso (CEO, Africa investor).
* Panel 7: “Innovation in capital markets infrastructure: relevance to African securities exchanges”, with banter between leading African IT vendors Sandy Frucher (vice-chairman of Nasdaq OMX Group) and Tony Weeresinghe (CEO of Millennium IT and Director of Global Development at the London Stock Exchange Group), and other contributions from Naseer Akhtar (President and CEO Infotech Group) and Hannes Takacs (managing partner of CAPMEX, the capital markets advisors).
December 3rd, 2013 by Tom Minney
Although trade finance continues to be dominated by US dollars (USD), China’s yuan currency, also known as Renminbi (RMB) became the second-most used currency in trade finance in October, according to a story on Reuters, citing global transaction services system SWIFT. This indicates the rising role of China in the world economy and it pushed out the euro (EUR) from second place.
The USD still has 81.08% of trade finance or Letters of Credit and Collection. The share of RMB rose to 8.66% in October, up from 1.89% in January 2012. The percentage of China’s total trade settled in RMB is up to nearly 20%, from 12% in 2012 However the RMB is till only the 12th payments currency of the world and its market share was 0.86% in September but fell to 0.84% in October.
Germany and Australia were among the top 5 countries using the yuan for trade finance in October, as well as the more expected China, Hong Kong, Singapore.
According to Franck de Praetere, SWIFT’s Asia Pacific head of payments and trade markets: “The RMB is clearly a top currency for trade finance globally and even more so in Asia”.
RMB payments increased in value by 1.5 percent in October, while growth for all payments currencies was at 4.6 percent.
China is the second biggest economy. It aims to lift the global role of the RMB currency and offer an alternative to world reliance on the USD. It is also hastening financial reform to promote its currency to international market participants.
December 3rd, 2013 by Tom Minney
Africa’s private equity funds have reported closing funds with $2bn in investments, according to the industry news source Private Equity Africa, citing data from Preqin data.
At the start of the year Ethos announced it had closed an $800m fund. The first fund by Vital Capital contributed $350m and Phatisa did not meet its original target on its first fund but announced a final close at $243m.
The total raised in full year 2012 was $1.8bn but the record, according to Preqin, was private equity’s boom year 2007 when $5bn was raised for Africa. The best year since the global financial crisis was 2011, with $2.9bn raised.
PEA reports that managers report that investors, or Limited Partners (LPs) are still slow to sign off on commitments. Actual investments are still lagging sentiment, earlier this year a survey of LPs by the Emerging Markets Private Equity Association (EMPEA) for the first time placed sub-Saharan Africa above the BRIC nations. The websites says that fund managers are starting to “feel the effect of change in strategy from the development finance community, which has traditionally been the industry’s fundraising saviour. Long-term industry anchors such as the CDC Group are now allocating more capital to direct investing and debt funds, meaning managers have to squabble for a shrinking private equity pool”.
December 2nd, 2013 by Tom Minney
Photos: Tom Minney
Wishing all group members who are here in Abidjan an excellent gathering for the 17th African Securities Exchanges Association meeting. The agenda looks excellent and it exciting to see many people gathering with determination to bring improvements and developments in our capital markets.
Congrats to the Bourse régionale des valeurs mobilières (BRVM) and to ASEA on again organizing an excellent and well constructed conference. The agenda and the speakers look excellent!
As I arrived, I have been very much enjoying looking around at Abidjan, my first visit. The city is beautiful, constructed on bridges lacing across the lagoon and sweeping the traffic around green islets. All the Ivoirians I have spoken to so far (hotel staff) are very proud of their city and excited to see it regain its former glory. It looks spectacular, and calm and organized for a city of 6 million, with giant boulevards and much greenery.
The scale of business here is impressive, with a truly regional stock exchange which joins 8 African countries, the African Development Bank is also racing to get back into its headquarters and in the haze a giant port through which lots of cocoa reaches the eager world. Long bridges link the city and plans are alive to build a third bridge to the east of the hotel, and even tramways.
Abidjan – reawakening economic giant.
West Africa is blessed with a chain of great economic and cultural cities, linked by highways and other ties and complementing each other towards unified African growth.
For more on the conference look here.
For details on the BRVM look here.
November 15th, 2013 by Tom Minney
Fast-rising inflows of investment capital to the African markets are spurring an increase in the banks offering custody services. But global players are held back by differences in infrastructure and legal structure in the different markets and the need to reach economies of scale in a low-margin business.
Custodians are responsible for safe-keeping assets. For instance, if a global fund manager wants to invest in different African markets, it might appoint a bank to keep its local holdings of equities or bonds registered in the name of the bank’s local nominee company and to ensure that all is correctly registered and administered including purchases and sales, dividends, voting rights and other actions. They are essential to the progress of institutional investors into Africa.
According to a excellent article by experienced journalist Liz Salecka for FinancialNews.com, the custodians that dominate are “the two pan-African banks”. She writes that demand for custody services is growing fast driven by two factors:
• international institutional investors flocking to take advantage of the region’s growth prospects.
• the rise of pension and unit trust investments as investors grow wealthier and domestic savings institutions increase.
Standard Chartered Bank says capital inflows to sub-Saharan Africa grew 4 times from $13.2 billion in 2003 to $48.3bn in 2012. They are hunting equity, fixed-income and money-market investments in markets such as Kenya, Nigeria, Ghana, Mauritius, Tanzania and Zambia. The article quotes Hari Chaitanya, regional head, investor and intermediaries, Africa, transaction banking at Standard Chartered Bank: “Portfolio equity investment in the region is focused on the most active and liquid stock markets in South Africa, Nigeria, Kenya, Mauritius and Zimbabwe, which the Johannesburg Stock Exchange continues to dominate, accounting for 83% of total market capitalisation in the region in 2012.” He added that, although South Africa will continue to dominate in terms of size, the fastest growth is in other countries. Several African countries are among the fastest growing in the world, with GDP growth rates experienced and foreseen of over 7% a year.
She also quotes Mark Kerns, head of investor services at Standard Bank as saying international investor demand will spur capital markets development: He added: “Domestic demand is also growing as a result of insurance expansion, growth in retail savings and increased pension fund investment in unit trusts and other vehicles as pension systems develop. This, supported by the emergence of a middle class, is further driving stock market growth.”
Who are the African custodians?
Standard Bank, the bank with the biggest operation in African markets, offers custody services in 15 sub-Saharan markets. Standard Chartered Bank, which launched a custodian services business in 7 African markets in 2010 after buying Barclays Bank’s custody business in Africa, has since expanded its network to 11 markets since then.
Global bank Barclays used to have a African custody operation but in line with the rest of its confused Africa strategy decided to sell that off in 2010 to Standard Chartered, according to a 2010 press release. Earlier this year, Standard Chartered also entered into an agreement with South Africa’s Absa Bank (also part of Barclays) to acquire its custody and trustee business.
According to the article, Standard Chartered and Standard Bank are expanding and introducing new services in a major movement to service foreign and domestic investors.
Newer global custodians entering Africa start in South Africa – Societe Generale in 1991 and Citibank in 2011 – and are expanding into new growth markets.
Writer Salecka cites Andy Duffin, head of sales, emerging markets at Societe Generale Securities Services: “If you look back at custody business in Africa, the bulk of it was focused on the South African market, which generated the most significant revenue in the region. However, there is now growing demand for custody products and services in other markets such as Ghana, Nigeria and Kenya, and it is no longer the view that South Africa will generate the most significant revenues.” He says believes existing providers branching out into new markets will drive market development more than new players entering.
Societe Generale Securities Services started operating in Ghana in June 2013, according to a press release. It offers custody services for Ghanaian equities and bonds, foreign exchange and cash-management services to local and foreign investors, frontier-market funds and other players looking for increased exposure to Ghana. “Clients benefit from the local knowledge and expertise of a dedicated SGSS team located within SG-SSB, a subsidiary of Societe Generale group, which is directly linked to the pan-African integrated services platform developed by SGSS in South Africa. This platform will be deployed in other African countries in due course. SGSS already operates in Tunisia and Morocco and was reported to be talking to authorities in Mauritius about access to the local central securities depository, where it also wants to offer custody services. Societe Generale is predominately a provider of securities services in this region, and has increased staff by nearly 50% since 2007.
A key feature of institutional investment and African capital markets development over the last 20 years has been sub-custody service for international custodians who want to offer their clients services in different markets without actually setting up operations in each country. This provides a significant component of Standard Bank’s business.
State Street is a leading example of a bank which offers fund administration services from its South African offices in Johannesburg and Cape Town but relies on a network of sub-custodians across the region to service the needs of its global and regional institutional clients. Its partnership with Standard Bank was instrumental in bringing American-regulated institutional investors into many African markets in the 1990s.
He also believes international banks cannot come into Africa just to do custody business.
According to Rod Ringrow, senior vice-president and head of official institutions for EMEA at State Street: “At the moment we are seeing significant inflows into sub-Saharan Africa from large institutional investors – and the flows from our clients will help determine where we want to be.”
Custody and capital markets development
Salecka writes: “The ability of new competitors to enter sub-Saharan Africa continues to be hindered by the challenge of building sufficient scale to operate profitably in a region characterised by diverse, small markets with different regulations… The scope for new entrants to offer custody services in sub-Saharan Africa is also hindered by the complexities involved in meeting the regulatory requirements of individual markets.” She points out that infrastructure is improving, and says there are now 26 central securities depositories across the region, but they all evolve at different paces and a couple of markets including Zimbabwe and Namibia still use outdated paper settlement. Different national regulatory, tax and capital market practices complicate the provision of standardised services.
She cites Standard Chartered’s Chaitanya who says providing custody services in sub-Saharan Africa should be part of a global bank’s wider strategy for the region. New entrants have to prove that they can provide a regional presence and commit to ongoing investment in technology and other infrastructure: “Apart from South Africa, many markets in Africa are still considered too small by many global custodians to establish a physical presence in the region. Hence, the domestic custody market is dominated by regional and local banks. Custody is about scale because it is not a high-margin business.”
Dirk Kotze, Africa banking advisory leader at Deloitte (in Johannesburg) told her many banks should consider whether the market is big enough for them to operate profitably: “They must also consider who are the dominant players and what they would provide to differentiate themselves. Potential new entrants must also look into whether they have clients from other markets that need services in this new market. In addition to providing basic services, custodian banks must be able to help clients understand and navigate their way through local regulatory market environments, which are evolving in line with broader economic growth.”
Standard Bank’s Kerns said: “Emerging and frontier markets are characterised by a number of challenges including the fact that many of them are still in the developmental phase. New entrants need to obtain a banking licence and be familiar with local regulatory and other infrastructure as well as the social and cultural dynamics of each country.”
Where African capital markets want to step up the involvement of international and domestic institutional investors they need to work to provide harmonized technical and regulatory environments for custodians, including information flows. Whether CSDs will eventually be able to take business from custodians remains to be seen, but for the meantime global custodians are key strategic partners for the development of the institutional investors that drive capital markets development.
November 13th, 2013 by Tom Minney
“Transformation is central to NamFin-X’s philosophy, and the exchange will benefit Namibia and Namibians in a plethora of ways, at both the micro and macro economic level,” said former Namibian Minister of Finance Helmut Angula. He is heading plans to establish a second securities exchange, the Namibia Financial Exchange (NamFin-X).
According to a report in local newspaper New Era, the current Minister of Finance Saara Kuugongelwa-Amadhila gave the exchange a licence in September 2012, as an association of 10 persons. According to the report, the shareholders of NamFin-X are 5 Namibian corporate entities, 4 individuals and 1 international corporate investor. Namibians own the majority, in line with the government’s policy of indigenous ownership of financial institutions.
It is envisaged the broader Namibian public will be able to own shares in the exchange.
Namibia’s existing Namibian Stock Exchange has been running since 1992 and has a good record for administration. It has very high market capitalization due to dual-listings but has also helped many local companies raise capital through listings. The editor of African Capital Markets News was GM of the NSX from 1995-2000 (see “About Us” page).
Since the approval, there has been a review of the application. In May 2013, a notice was published in the Government Gazette that NamFin-X’s application and rules for the stock exchange were open for inspection. The regulator called for comments from the public through advertisements in 2 local daily newspapers over 3 weeks. This closed at the end of June 2013.
The article reports that the promoters have solicited the experienced management, rules and listing requirements, and IT from a reputable source and investment partner. No more details were given but it quotes Angula as saying: “NamFin-X will provide Namibia with world-class financial services and regulators, and membership of the World Federation of Exchanges which will provide a footprint on the world stage and will lead to a more competitive, more liquid financial sector.”
“NamFin-X will widen the economic participation in the market, empower issuers and investors to realise their economic freedom and more importantly, fill a much needed funding gap allowing many new ventures and SME businesses to realise their economic potential.
“NamFin-X will not only provide sources of finance for these businesses but also access to the expertise and experience of investment companies, the investment community and a nominated advisor. This will occur within a regulated framework.
“The general public as well as companies looking to raise capital will benefit from the proposed new exchange because of the competition and increased liquidity that an alternative bourse will provide. The initiative is aligned with, and supports Namibian government policy, including investment in job creation, investment in financial services education, new enterprises and socio-economic transformation.
“NamFin-X is a truly Namibian endeavour, and fundamentally Namibian in its philosophy.”
Angula pointed out that 60% of the new exchange’s developmental goals are closely integrated and cognisant of Namibia’s Vision 2030 and the National Development Plans. It also refers to Namibia’s Financial Sector Strategy (NFSS), which seeks to “guide the achievement of the financial sector objectives as set out in the various national development plans (NDPs and Vision 2030)” and to ultimately “contribute to fostering economic growth and poverty alleviation as well as reducing income inequality.”
November 4th, 2013 by Tom Minney
Shareholders of leading investment company Citadel Capital have voted recently to allow the company, which says it has $9.5 billion in investments under control, to boost capital by EGP 3.64 billion ($528 million). According to a press release, it is part of “the firm’s transformation from the largest private equity firm in Africa into the leading investment company in the region.”
Citadel is listed CCAP.CA on the Egyptian Exchange. Shareholders voted at an extraordinary general meeting (EGM) in Cairo on 20 October. The shares will be issued at par value (EGP 5) and would boost capital from EGP 4.36 bn to EGP 8.0 bn. Shareholders will participate in the share issuance on a pro-rata basis.
Citadel Capital says it will use the capital to reach majority ownership in most of its platform companies, in particular the firm’s subsidiaries in its five core industries: energy, transportation, agrifoods, mining and cement. It plans to exit non-core investments over the coming few years as it transforms its business model to become an investment company.
Citadel Capital Chairman and Founder Ahmed Heikal said in a press release: “Approval to launch the capital increase signals clear shareholder confidence in our transformation into an investment company. The long-term holding periods permitted by the new model will allow Citadel Capital to maximize value creation through a balanced portfolio that includes a healthy mix of both assets that provide stable dividend streams and that are cash generative, and others that are in high-growth phases.”
November 4th, 2013 by Tom Minney
Rift Valley Railways (RVR) has repaired 500 kilometers of track between Tororo in eastern Uganda and Gulu in the north. This opens north and northwest Uganda to rail services after 20 years of disuse and inefficiency and provides businesses targeting South Sudan and eastern Democratic Republic of Congo with cheaper transport, including for bulk items.
RVR is a “platform company” for Citadel Capital (citadelcapital.com, CCAP.CA on the Egyptian Exchange), which controls investments worth $9.5 billion and is a leading investment company in Africa and Middle East focusing on energy, transport, agrifoods, mining, and cement and able to tackle large and long-term projects. It operates freight rail services in Kenya and Uganda on an exclusive basis with a mandate to operate railway services on 2,352 km of track linking the port of Mombasa with the interiors of Kenya and Uganda, including Kampala.
Uganda’s President, HE Yoweri Museveni, attended the relaunch of the Tororo-Gulu-Packwach link with Citadel Capital Chairman and Founder Ahmed Heikal, TransCentury Director/Chairman RVR Ngugi Kiuna and BOMI Holdings Chairman Charles Mbire, as well as local government officials and key executives from Citadel Capital and RVR.
According to the press release Dr Heikal said: “Rift Valley Railways is the investment that first brought Citadel Capital to East Africa, a region many of us at the firm now view as our second home on this great continent that we share. Intra-regional trade currently accounts for just 9% of Africa’s total commerce, and we believe this new line is an important milestone that will further complement ongoing Ugandan Government initiatives aimed at facilitating trade on the continent.
“RVR is an excellent example of what can be achieved in Uganda and the continent in the future. It is truly a global financing effort — with shareholders like Bomi in Uganda, our partners Transcentury in Kenya, and Citadel Capital from Egypt.” According to the press release, he said that funding comes from OPIC (US Government arm which finances private sector), sovereign and quasi-sovereign wealth funds from the UAE and Norway, the International Finance Corporation, and the German, French and Dutch governments. RVR’s lenders also include the African Development Bank (AfDB), the International Finance Corporation (IFC), KfW Entwicklungsbank (The German Development Bank, KfW), FMO (the Dutch development bank), Kenya’s Equity Bank, the ICF Debt Pool, and the Belgian Investment Company for Developing Countries (BIO). Africa Railways, Citadel Capital’s platform for investment in the African rail transport sector, counts among its equity investors the IFC African, Latin American and Caribbean Fund LP (ALAC, the private equity fund managed by the IFC Asset Management Company LLC); FMO; German development finance institution DEG; FISEA, a vehicle dedicated to investment in Sub-Saharan Africa owned by France’s Agence Française de Développement and managed by its subsidiary PROPARCO; and the International Finance Corporation. Technical partners are global experts from America Latina Logistica in Brazil.
RVR Group Chief Executive Officer, Darlan de David said that RVR will expand in Gulu and eventually transform the town into a logistical hub for its operations in northern Uganda and the surrounding regions.
Citadel Capital Managing Director Karim Sadek noted: “This new service will play a vital role in promoting regional integration and trade by providing access to areas that were once closed to rail transportation. Working with logistics partners and our own logistics subsidiary, East Africa Rail and Handling, we will provide end-to-end transport and delivery solutions for customers in this important part of East Africa.”
The financing of RVR was previously covered on this blog in 2011.
November 1st, 2013 by Tom Minney
The big African securities exchanges event of the year is drawing close. The 17th General Assembly and annual conference of the African Securities Exchanges Association (ASEA) will be 1-4 December in Abidjan, Cote d’Ivoire. As usual, expect top leaders from nearly all the African securities exchanges plus a host of international capital-markets experts, policy-makers, Central Bank governors, African and international financiers, key investment and journalists.
West Africa’s regional Bourse Régionale des Valeurs Mobilières (BRVM), an innovative exchange which covers 8 countries, will host the gathering, which will be held under the patronage of His Excellency President Alassane Ouattara, The theme will be: “Africa: From promises to achievements, the key role of capital markets”.
The conference action starts on 3 December, with a welcome from Gabriel Fal, chairman of the BRVM, opening remarks by Sunil Benimadhu, President of ASEA and a key figure in the development of Africa’s markets, a keynote address by Tiémoko Meyliet Kone, Governor of the BCEAO, on “The financing of the West African Monetary Union economies: new challenges” and an official opening address by HE Alassane Ouattara.
The main action for the public are the panels on 3-4 Dec. Your editor has the privilege to moderate a top-quality Panel 7 on my favourite topic, innovation, infrastructure, technology and the development of the African markets.
The day before, 2 Dec, will be used for the ASEA Executive Committee and ASEA General Assembly meetings and a welcoming cocktail for all. The conference will be held at Sofitel Hotel Ivoire, as listed on our conferences page. For bookings, go to the excellent ASEA2013 conference website.
Top speakers, excellent panels
This is the programme according to the ASEA2013 website today (1 Nov).
Panel 1: Frontier markets: why now and why African frontier markets?
• Moderator: Yvonne Ike (Chief Executive of RENCAP Nigeria)
• Susan Payne (Executive Chair of EmVest Agricultural Corp, Africa)
• Colin Bell (Head of Global Capital Markets at stockbroker Auerbach Grayson)
• Matthieu Pigasse (CEO Lazard and Chairman Lazard Africa)
• David Finch (Chief Economist, Exane, BNP Paribas)
Focus guest speaker: Thierry Tanoh, CEO Ecobank Transnational International “The investment opportunities in sub-Saharan Africa”
Panel 2: Frontier markets: telling the story right
• Moderator: Anne Guimard (CEO, FINEO Investor Relations Advisors)
• Adam Malik (Associate Director, Investis)
• Paul Clark (Portfolio Manager, Ashburton Investments)
• Fidelis Madavo (Head of resources, the Public Investment Corporation, South Africa)
• Ashley Bendell (frontier markets specialist)
Panel 3: Why is it important to support the growth of vibrant capital markets in Africa?
• Moderator: Nader Mousavizadeh (Macro Advisory Partners)
• Andy Gboka (Equity Research Analyst, Exotix London)
• Ibrahima Kobar (Chief Investment Officer Fixed Income, Natixis Asset Management)
• Abdoulaye Bio Tchane (President of Alindaou Consulting International and Chairman of Africa Guarantee Fund)
• Christian de Boissieu (Professor of economics and member of AMF)
Panel 4: African mining resources and infrastructure financing through capital markets
• Moderator: Geoff Rothschild (Johannesburg Stock Exchange)
• Jean-Louis EKRA (President, AfriEximbank)
• Gabriel FAL (Chairman BRVM and DC/BR)
• Marc Antoine Audet (CEO Sama Resources)
• Ungad Chadda (Toronto Stock Exchange)
Panel 5: Why should private equity funds use African stock exchanges to exit?
• Moderator: Hubert Danso (CEO of Africa investor)
• Cyrille Nkontchou (President, ENKO Capital)
• Amelia Beattie (Chief Investment Officer, Stanlib)
• Luke Kinoti (Chief Executive, Fusion Group, Kenya)
• Frederic Hottinger (Chairman Bank Hottinger)
• Tim Turner (Director of private sector operations, AfDB)
Panel 6: African capital markets success stories: investors’ and issuers’ perspectives
• Moderator: Sunil Benimadhu (CEO, Stock Exchange of Mauritius)
• David Grayson (CEO Auerbach Grayson)
• Ashley Bendell (frontier markets specialist)
• Paul Harry Aithnard (Group Head, Securities and Asset Management, ETI)
• Mohamed Khalil (Chairman of Dari Couspate)
Panel 7: Innovation in capital markets infrastructure : relevance to African securities exchanges
• Moderator: Tom Minney, African Capital Markets News
• Sandy Frucher (Vice Chairman, Nasdaq OMX Group)
• Tony Weeresinghe (CEO of Millennium IT and Director of Global Development at London Stock Exchange Group)
• Hannes Takacs (CAPMEX Institute)
• Naseer A. Akhtar (President and CEO, Infotech Group)
Panel 8: Cross-border fund-raising and capital-markets integration in Africa
• Moderator: Oscar Onyema (President West African Capital Markets Council)
• Peter Mwangi (CEO, Nairobi Stock Exchange)
• Mohamed Bennani (President, Bank of Africa Group)
• Ekow Afedzie (Deputy Managing Director, Ghana Stock Exchange)
• Saïd Ibrahimi (CEO, Casablanca Finance City)
• General Secretary of Conseil Régional de l’Epargne Publique et des Marchés Financiers (CREPMF) of West African Monetary Union
October 31st, 2013 by Tom Minney
London is back at the top of the world’s international financial centres, pushing out New York again, according to a world ranking of IFCs prepared by The Banker magazine. London excelled in factors such as business friendliness and the depth of the various business clusters present. It generates the largest value of outward as well as inward foreign direct investment in the financial sector.
A recent article in The Economist says international trading in China’s yuan currency has tripled over the past three years to $120 billion a day, with London accounting for a third.
On 29 October, speaking at a World Islamic Economic Forum (WIEF) meeting in London, Prime Minister David Cameron said that the UK also intends to become the first country outside the Islamic world to issue its own Islamic bonds, known as sukuk. A new Islamic index is to be launched on the London Stock Exchange to establish the City as one of the world’s leading centres of Islamic finance. According to Reuters, The bond, expected in 2014, will be £200 million ($321m), smaller than earlier planned and would provide a much-needed liquidity management tool for Britain’s six Islamic lenders and could encourage local firms to consider issuing sukuk of their own.
Africa’s IFCs – Johannesburg and Mauritius
Among The Banker’s IFCs, Mexico City has jumped 15 places to a world ranking of #15. At the end of 2012 Mexico City hosted its largest initial public offering with the $4.1bn listing of the Mexican operations of Spanish bank Santander. Johannesburg is the only African IFC to feature on the main list, coming in at 35th which puts it ahead of Munich (36) and Bangkok (37) but behind Copenhagen (14), Stockholm (24), Edinburgh (30) and Madrid (34).
Mauritius is ranked 6 out of 13 specialized financial centres, up one place and now following Cayman Islands, Jersey, Guernsey, Bahamas and Bermuda.
The Banker’s ranking of IFCs is based on data ranging from financial markets indicators to economic potential to business environment factors. The ranking focuses on the level of international business and the value offered to institutions seeking to expand their international operations as well as international appeal. Different data is used for the specialized centres.
London had a similar score to last year’s winner, New York on a financial markets data category. London led in various components that contributed to its financial markets score, such as: the number of new foreign listings (a total of 36 against New York’s 29) and the issuance of international debt securities ($3,401bn against New York’s $1,977bn). New York has the largest volumes of assets under management ($920bn) among firms that it hosts.
Singapore and Hong Kong are in third and fourth positions, respectively, the latter displacing Frankfurt (now 5). Beijing is the most improved Asian IFC, moving from #36 in 2012 to #32 this year in the overall ranking. It is now ranks #7 among Asian IFCs, overtaking Kuala Lumpur (8). Bangkok has also climbed 4 positions in the global ranking and comes in ninth regionally.
Number one global IFC by cost is Copenhagen, with office occupancy costs lower than many emerging markets and low employment-termination costs.