Archive for the 'Equities' Category
September 4th, 2012 by Tom Minney
Months of hard work came to a climax when the Botswana Stock Exchange successfully launched its automated trading system (ATS) and now has live trading. This replaces the open outcry trading system and the aim is to make the BSE more visible and trading more efficient. The exchange has been using a central securities depository (CSD) since 2008 and this was upgraded alongside the implementation of the ATS.
The ATS was installed by MillenniumIT, part of the London Stock Exchange Group, after a BWP8.8 million ($1.1m) contract. MillenniumIT also installed the CSD.
The new system was implemented on Friday 24 August. The day before, Thursday 23 August, was a trading holiday, while Friday was a settlement holiday with trades settling instead on 27 August. These holidays were meant to enable the BSE to transition from the old CSD system to the upgraded version.
There is still a key target to encourage more shareholders to dematerialize their paper certificates and register them in the CSD for ease of trading. According to the BSE Annual Report, 46% of all domestic company shares and 91% of foreign company shares were dematerialized by December 2011, and so was the first corporate bond. In the annual report Chairman Patrick O’Flaherty notes “Along with the implementation of the ATS, our CSD (Central Securities Depositories) system is also being upgraded. This will ensure that the trading, clearing and settlement infrastructure of the BSE remains state of the art”.
In 2011 the BSE recorded average daily turnover of BWP4.1m. The volume of shares traded in 2011 was 458.7m, up from 308.7m in 2010. Letshego Holdings did a ten-for-one share split in 2010 and Furnmart and G4s followed suit in 2011.
INTERVIEW WITH HIRAN MENDIS, CEO OF BOTSWANA STOCK EXCHANGE
ACMN: What has the market participants’ reactions to the ATS?
HM: The response has been very positive. Automated trading is a completely new development in our market, but all market participants, particularly the brokers, have embraced the development and have basically hit the ground running. The amount of enthusiasm in the market is very humbling for the BSE.
ACMN: Were there any problems in the implementation?
HM: Apart from the normal day-to-day challenges that form part of any project, there were no major challenges. As the BSE, we had to work extra hard throughout the lifetime of the project to bring all stakeholders together and make sure that everyone is on the same page; that everyone understands and embraces the primary objective of bringing our market to par with other regional and international giants. Overall, it has been an extremely demanding but very rewarding experience for all stakeholders.
ACMN: Have you seen an increase in trading volumes?
HM: It’s still too early to say. In the first 2 days, it was quiet; probably because the traders were being cautious with the new trading platform. But turnover has since jumped back to previous levels.
ACMN: Are brokers now connecting from their offices (wide area network)?
HM: The brokers have been connecting from their offices since 2008 and this setup is still being used, even with the ATS. The networks have so far been very cooperative as we have not had any outages. The links that we have been using for WAN connectivity since 2008 have been very stable. On average, we have experienced less than 10 hours of downtime per year since 2008. About half of this downtime happened outside of trading hours.
ACMN: Can you give some technical details about the ATS and the CSD and their integration?
HM: The ATS is a trading platform, primarily responsible for accepting client orders, as input by brokers, and matching those orders on set criteria to produce trades. CSD system acts as a back-end for the ATS, handling the registry function for the ATS, together with clearing and settlement of all trades that happen at the ATS. For a client to be able to trade through the ATS, then they need to open a CSD account first. Communication between the systems is on a real-time basis and as clients buy/sell shares, their CSD account balances are updated in real time. The ATS is able to trade equity, debt, ETFs (exchange-traded funds), and GDRs (global depository receipts). Instruments that are currently actively trading through the ATS/CSD are equities and ETFs. Plans to include bonds are underway and CFDs will follow in due course. Trading currently happens from 10:30 to 13:30. The first trading session is an opening auction, followed by regular trading, then an interim auction session, then another regular trading session, which is followed by a closing auction session, and finally a closing price cross session.
ACMN: What future steps are planned – such as increased data flows, remote membership of BSE and direct market access?
HM: At this point we are more concerned with ensuring that that system continues to function according to expectations. Once the dust has settled and all stakeholders are comfortable with the system then the BSE will begin exploring availing market data in real-time to data vendors etc. After that, as a second phase of the automation drive, we will explore the possibility of Internet trading. As the BSE, we understand and appreciate that a wide spectrum of developments are now possible with an automated market. Funds and time permitting, we will build services around the CSD/ATS systems in order to turn our market into a true global player.
April 2nd, 2012 by Tom Minney
This morning (2 April) South Africa’s securities exchange, the JSE Ltd, announced a revised strategy to attract more listings from African countries, as they say international interest in investing into the continent’s growth story continues to soar. The JSE is closing its Africa Board and moving the 2 listed companies onto the Main Board (listing requirements for the Africa Board are the same as for the Main Board) or to Alt-X if they are growth companies. The JSE is also stepping up trading in depository receipts (DRs) and offering a broader range of exchange-traded funds and debt instruments.
Siobhan Cleary, Director of Strategy and Public Policy at the JSE, said in a press release: “The JSE’s existing African offering includes 12 African companies. In future, there will be no differentiation (for listing purposes). For equities, this will mean that we will list the companies on the Main Board or AltX as applicable. We will also actively market and profile the African companies that are already listed.”
She says the move is driven by demand for capital and also by the increasing supply of capital from investors. African consumer markets are increasingly being targeted by local companies and companies from overseas, including a growing wave of foreign direct investment activity. Other very active channels for investments are private equity funds, hedge funds and other investors. “We think it is time that stock exchanges started to play an appropriate role in channelling the investments.”
In October 2011 South Africa’s National Treasury announced that companies previously viewed as foreign listings would in future be treated as domestic and this makes it easier for South Africans to invest in JSE-listed African stocks and makes it easier for foreign companies to raise capital. South African institutions will apparently be able to include JSE listed companies among their domestic asset holdings. Second, the JSE has developed good relations with several stock exchanges on the continent through the African Stock Exchanges Association and the Committee of SADC Stock Exchanges. Third, there are increasing investment flows into the continent’s markets and more funds focused on the region, seen as high growth compared to many world markets.
Nathan Mintah, Chairman of the JSE’s Africa Advisory Committee, commented: “This evolution in JSE’s strategy is a step in the right direction in the quest to increase capital flows into the rest of Africa. Offering issuers and investors the ‘whole JSE’ market platform for access to instruments across the capital structure in equities, mezzanine, and fixed income combined with the JSE’s liquidity will clearly benefit all stakeholders and serve as a catalyst for product innovation in areas such as exchange traded products for the rest of Africa.”
The JSE is diversifying the instrument range it offers investors from the rest of the continent. Cleary says: “We already have four interest-rate instruments from the rest of the continent, as well as an African exchange-traded product. We will give increased focus to listing further debt and quasi-equity products in future. These will also include DRs, which are traded like shares and offer investors the same economic, corporate and voting rights as holding underlying shares directly. DRs enable issuers to reach investors located outside their home markets while reducing the risk of cross-border investment.” The JSE altered its listing requirements last year to accommodate DRs, which will provide a way for African companies to raise capital on the JSE without requiring a secondary listing. DRs are applicable for African companies regardless of whether they have an existing listing on an African exchange or any other exchange. Freely traded in South African Rands, this will allow African companies to market themselves to both South African and international investors.
Cleary says there is a pipeline of companies interested and she expects more African listings this year. The JSE is competing with international exchanges such as London and New York for key listings, and also with Australia and Toronto for mining listings. Recently Nigeria’s Aliko Dangote said (see article in Financial Times, for instance) he would take the $11bn Dangote Cement for a London listing in 2013, and last year Zambia’s Zambeef also opted for London.
The two listings on the JSE Africa Board, launched in February 2009, were Trustco from Namibia and Wilderness Safaris from Botswana. The JSE says both prefer to be ranked with their sector peers and in industry sectors. Quinton van Rooyen, Trustco Group MD, commented: “This repositioning of Trustco allows the company, whilst keeping its African identity, to be benchmarked against its peers, on a world-class platform. This can only be beneficial to Trustco and the extensive African investment community.” The JSE is also pledging roadshows and analyst events to highlight the African companies from outside South Africa.
The JSE believes that its approach provides a workable solution to the sometimes complex issue of investment on the continent. The JSE’s approach also contributes to the development of markets within their own economies. Cleary added: “There is an opportunity for the JSE to work with these exchanges and various development institutions to build capacity on the continent. It also gives the JSE the opportunity to evolve its Africa strategy. This has meant looking critically at what issuers – companies, governments and others – from the rest of the continent are looking for, and aligning their needs with the JSE’s objectives,” says Cleary.
August 17th, 2011 by Tom Minney
South Africa’s JSE Ltd stock exchange (www.jse.co.za) reported a 22% increase in net profit after tax to R253.8 million (US$35.8 m) for the six months to June 2011. This is driven by a 7% increase in revenue combined with controlled operating costs and the group declared a special dividend of 210c/share.
CEO Russell Loubser said in a press release: “All divisions of the JSE reported an increase in revenue in the first half of 2011, with particularly strong performances from the cash equities, commodity derivatives and currency derivatives markets. This revenue growth, combined with lower operating expenses, indicates a better performance. We also retained the focus on our major strategies.”
The JSE says it offers investors “a truly first-world trading environment, with world-class technology, surveillance and settlement in an emerging market context. It is amongst the top 20 largest equities exchanges in terms of market capitalisation in the world.”
Sources of revenue
The JSE gets its revenue from different activities:
• Issuer services –This division handles company and debt listings and revenue climbed, 6% to R48.8 m (H1 2010: R45.8 m). In the first six months of 2011, 5 companies listed on the bourse, compared to 6 in the first half of 2010. Loubser said: “Though there is a listings pipeline, potential issuers remain hesitant about the current economic environment. This is in line with the experience of other World Federation of Exchanges members.” (www.world-exchanges.org).
• Equity market – The number of trades climbed 5% and value traded increased 4% pushing total equities revenue up 8% to R371.7 m (H1 2010: R344.5 m).
• Equity derivatives market – Revenue rose 5% to R55.9 m (H1 2010: R53.3 m) as a 4% dip in the number of contracts traded was countered by a 12% rise in value traded. Loubser said: “This year, the equities derivatives team has worked hard to encourage trading of single-stock futures on the central order book, which we believe is key in unlocking larger volumes and attracting international players. There was also strong growth in index derivatives and bespoke products traded on-exchange.”
• Currency derivatives market – Revenue climbed 44% to R7.2 m, attributed to a change in the billing model to stimulate trade, a wider range of instruments traded and the introduction of bespoke, on-market products. Currency derivatives are a small but growing portion of group revenue.
• Commodity derivatives – revenue grew by 15% to R23.6 m (H1 2010: R20.6 m) largely due to increased trade. Loubser explained: “Local maize and wheat contracts continue to make up most of the trade in this market, but the trade of foreign-referenced instruments under licence from the CME Group continues to rise.”
• Interest rate market - Strong secondary trade figures resulted in a 16% revenue growth to R19 m (H1 2010: R16.4 m).
• Information product sales – Data sales to existing clients contracted, both locally and internationally, but revenue grew 4% to R61.1 m as the team continues to grow its base of international clients.
Special dividend
The special dividend is to be paid because the exchange has sufficient cash reserves for its current needs. It sets aside cash to fund operations, guarantee central order book equities trades, maintain infrastructure and meet capital needs for expansion. Loubser said: “Testing of the new equities back office system is progressing well and the new system is set to be implemented in 2012. As the capital expenditure for this project comes to an end.. the Directors have declared a special dividend of 210 cents per share”. The dividend will be paid out on 12 September.
In the last six months, the JSE has:
• Completed the integration of the interest-rate market trading platforms so that there is now a single platform for trading.
• Delivered the first phase of the remote disaster recovery site
• Made good progress in implementing the new state-of-the-art data centre which is scheduled to be completed before year end.
June 14th, 2011 by Tom Minney
The Egyptian Exchange (www.egyptse.com) is to introduce new products and trading innovations, including remote orders placed abroad, exchange-traded funds (ETFs), intraday trades and short selling. Mohamed Abdel Salam, chairman of the Exchange, told Reuters that transparency was up and political uncertainty was down in Egypt since the political uprising that overthrew former president Hosni Mubarak and this is bringing more investor confidence.
The trading changes had been delayed as the political mandate of the old government decreased. Some innovations could be introduced in July and talks on remote orders are to resume with the London Stock Exchange (www.londonstockexchange.com) on 20 June.
Mohamed Abdel Salam told Reuters in an interview on 13 June: “There are indicators that show the market is improving because of the revolution. First, it reduced political risk. In the past, things were vague. If the president were to die, would his son take over, or would the army? Many people have started trusting us now, and we are also trying to reduce transaction costs on foreign investors … so I think we will now introduce short-selling and intraday trade in the first days of July.”
He said that companies had been on time in publishing quarterly results, indicating the effects of the revolution on their earnings, and this improved the country’s credibility. In addition, since the changes institutional investors had become more prominent: “The market is becoming more stable, because institutional investors have begun to outnumber individual investors, who used to cause sharp market moves by their emotional trading.” Egypt is one of the African exchanges with very many active local individual shareholders.
He said the aim of the changes is to bring new energy into the exchange: “Egypt’s market is in need of new blood to be pumped in; it needs new products … It is unarguable that this is a main way to increase liquidity and volume.” Previously there had been moves to introduce short selling in 2008 but this had not been introduced in 2010 as scheduled.
Remote orders with FIX
The Egyptian Exchange aims to allow investors to place orders from abroad although trading would still have to be executed through a local broker. Investors could use the Financial Information eXchange (FIX) protocol (www.fixprotocol.org) to place orders and secure the details until the transaction was completed by the broker. The first link was due to be introduced via London in mid-2010, reports the agency, followed by links to centres in the Gulf. The Chairman said the delays had been caused by technical problems at the LSE and talks would resume this week on 20 June.
Another plan is for dual-listings with exchanges such as Qatar, Dubai, Abu Dhabi and Kuwait. Abdel Salam said: “There are Gulf companies that expressed a desire to enrol in the Egyptian stock exchange but I cannot disclose names now.” Several exchanges have been vying to form the centre of Arab trading.
Commodity trading in gold could be established through a fund and talks are on with Egypt’s Chamber of Metallurgical Industries. The Chairman said: “We want to introduce a new way to trade gold called ETC, standing for Exchange Traded Commodities; this should facilitate trading of raw gold, and Egypt is a strategic gold producer, so we should make use of it.”
The Egyptian Exchange was closed from 27 January to 23 March after the popular uprising and it faced turbulence and pent-up demand when it did open. The benchmark EGX 30 Index closed on 13 June at 5,550.22, down 17.5% since the revolution although the trend has been positive since a low of 4,850.41 on 8 May.
June 3rd, 2011 by Tom Minney
I have the honour to be published on the opinions section of the Royal African Society website and the article can be seen along with their excellent blogs here. I also reprint the article, which is meant to spark debate, and I welcome your comments – is it time for change and what is the way forward?
“The wind of change” was Harold Macmillan’s famous 1960 phrase about Africans moving to political self-determination. Half a century later the world’s biggest securities exchanges are worrying who will survive a hurricane of globalization, technology and competition, but some of Africa’s capital markets still seem sheltered from the economic winds of change.
The giants of securities trading are slugging it out in a wave of mergers and acquisitions and London Stock Exchange (LSE) chief executive Xavier Rolet said: “In five years there will be three, four international exchange groups with global distribution capabilities”.
In the world of mega-bourses the LSE launched a £4.3 billion merger with Canada’s TMX Group of exchanges but a “Maple consortium” of Canadian financial institutions has launched a hostile bid, seeking to block the marriage. New York’s NYSE Euronext and Germany’s Deutsche Börse want a $9.5 bn union, but US stock exchange NASDAQ and its partner IntercontinentalExchange are offering $11.3 bn to snatch the New York bride. NASDAQ is reportedly worth $5.7 bn and worried it may become a takeover target if it stays single. Many other leading exchanges are busy with strategic transactions.
Africa however has not seen much change at least in the last decade. Some of Africa’s stock exchanges are making a few operational changes, but structural transformation is not on the agenda. The continent has a couple of world-class stock exchanges – in 2010 South Africa was rated the world’s best-regulated capital market – and three or four better exchanges with enough liquidity for international and big local institutional investors. The rest of the continent features a small regional exchange and more than 15 national stock exchanges where activity could drop to a few deals a day and liquidity is too small for the market to work efficiently or provide scope for minimum transactions for international investors. Some don’t even open their doors every working day.
Stock exchanges and securities markets evolved worldwide as the most efficient way to channel capital from savers to entrepreneurs, governments and others who can use it most productively, i.e. profitably. Savers with capital are more than eager to invest billions of dollars into Africa, dubbed the “final growth frontier” for its vast opportunities and favourable pricing. Meanwhile in Africa, entrepreneurs and governments are calling for billions in capital to build roads, rail, power, water and telecommunications/IT infrastructure up and down the continent and to transform farmlands, build industries and hopefully improve livelihoods sustainably through business.
Nationalist politics and comfort zones are among the factors holding back African securities exchanges, which have traditionally been seen as national institutions. Sovereignty has been more highly prized than liquidity and efficiency. In 2009 South Africa’s JSE Ltd sought to acquire a stake in the Stock Exchange of Mauritius (SEM) after two years of talks, but regulators blocked it. Nationalism about stock exchanges is not just an African concern, it is currently in the news in Canada and Australia.However, now technology is available to transform exchanges without losing national regulation or denting pride.
Some African exchanges are improving their own operations fast. The two NSEs – the Nigerian and Nairobi stock exchanges – have taken stern measures to improve governance, regulation and transparency. In Nigeria this included a morning in August 2010 with armed police on the Lagos trading floor after regulators fired the Director-General. Other exchanges such as Mauritius Stock Exchange (SEM) are noted for continuous improvements and innovation. However, only the Egyptian Exchange, the JSE (Johannesburg Stock Exchange) and SEM have attained the exalted membership of the World Federation of Exchanges.
In some countries trading in debt is improving faster than equity markets. Kenya’s NSE launched effective automated bond trading, backed by much improved settlement, and trading volumes and liquidity are soaring. The Government is responding with a deft series of issues that balance the domestic market and stretch it with long-dated 25- and 30-year bonds. Better maturity in the national fixed-income market enables lenders to offer locals long-term housing and other finance with paybacks over decades rather than a few years. Electricity company Kengen, telecoms operator Safaricom and others have raised hundreds of millions of dollars through bond issues, many aimed only at local savers. The overall effect on the economy is likely to be huge.
But change is coming slow to some African exchanges where liquidity is too small and action too slow. International investors complain that many don’t have enough trading to accommodate the minimum buy or sell amounts required and they lament the quality of market and business information and transparency. Coupled with the operational problems and uncertainties that dog local and international businessmen in many African countries, some are still “off the map” for investment.
London, New York and other international stock exchanges benefit if companies and bond issuers seek listings and cross-listings internationally in order to get closer to investors and sources of capital and because efficient marketplaces make their capital raisings more attractive to investors. London has a tradition as the world’s capital marketplace and the LSE’s Main Market lists 18 equities for trading that focus on Sub-Saharan Africa. In 1995 the exchange created the Alternative Investment Market (AIM) as an international marketplace for smaller, growing companies seeking growth capital, including early-stage and venture-capital, as well as more established companies. Sub-Saharan Africa scores 55 out of 3,000 listings, mostly mining firms, but also farming, finance and machinery.
NYSE Euronext Inc says trading in 16 African equities listed on its New York and European stock exchanges has boomed. Stefan Jekel, managing director for Europe, Middle East and Africa, says main activity stems from South Africa but interest in Africa is growing: “The volume (number of shares) traded has increased by factor of 12 over the last ten years to 7.9m shares, and the value is up by a factor of 21 times to $204m per day”.
London is to the fore when it comes to international Eurobond issues as African countries rush to issue sovereign debt and benefit while world interest rates are rock-bottom. Interest is also growing in African derivatives such as Exchange-Traded Funds (ETFs) available on London, New York and other international markets and one or two African markets. NYSE says the number doubled in 2009 to ten ETFs, six in Europe and four in New York, and they have over $1bn in assets.
It is an historic opportunity for Africa’s capital market structures. However much national exchanges improve, they need radical restructuring to create liquid and more efficient markets or they will be blown off the map by the winds of change.
Kwame Nkrumah (1909-1972) and many others transformed the continent driven by their vision of a mighty Africa that grew strong by unshackling the borders that colonial powers had drawn on maps. The African Union is founded to achieve regional and economic integration for Africa to take its rightful place in the world. Capital markets have an opportunity in that technology and proven models exist for African stock exchanges to pool trading while still maintaining national exchanges and regulation and being adaptable to meet local requirements.
Sunil Benimadhu, President of the African Securities Exchanges Association and CEO of SEM said in November 2010 that world investors see the continent as “a very promising investment destination with tremendous present and future growth potential”. African countries have achieved growth rates exceeding 5% in recent years after embracing fundamental structural reform programmes. The growth is set to continue but it must be fuelled with capital, skills and improvements in the investment and business climate.
African capital markets have an opportunity and a challenge.
Tom Minney is a consultant, speaker, financial journalist and editor of the blog www.africancapitalmarketsnews.com
May 31st, 2011 by Tom Minney
The London Stock Exchange (www.londonstockexchange.com) has long been a global centre for capital, particularly where African investments are concerned. It is also the world centre for Eurobonds and several leading African equities are traded in London. There are several reasons to come to London, either through listing or cross-listing, including being closer to investors and sources of capital such as funds and investment trusts and also because investors may find it more attractive to invest in companies that are listed on a well-known and recognized stock exchange. A few international exchanges, including London, Toronto and Australia, are also known as centres for world mining equities and attract specialized listings..
The LSE’s Main Market lists 18 equities for trading that focus on Sub-Saharan Africa. These are mostly South African firms covering food, industrials and mining and the history began with AECI in 1937 and Tongaat-Hulett in 1939. The main board also includes Zimbabwe’s hotel group Meikles, Hwange Colliery and financial services firm NMBZ; Kenya’s Kakuzi food products and Zambian miner ZCCM. All listings after NMBZ (1997) were incorporated outside Africa, including Channel Islands Jersey and Guernsey, Bermuda and UK. The list doesn’t include the “London Five” – Anglo American, BHP Billiton, SAB Miller, Old Mutual and Investec –of giant firms who caused controversy when they moved from South Africa. Africa is now a small part of their operations.
AIM, the LSE’s international market for smaller, growing companies, was created in 1995 for businesses seeking growth capital, including early-stage and venture-capital, as well as more established companies. Sub-Saharan Africa scores only 55 among the 3,000 worldwide companies. The list is dominated by mining companies, many incorporated in UK, offering investors exposure to gold, diamonds, gemstones, uranium, platinum, coal, iron and other metals and minerals spread across Africa from South Africa to Liberia and Sierra Leone. Also on offer are financial services, farming and fishing, water, computer services, real estate, industrial machinery and alternative fuels. Most of the countries of operation are English-speaking, but others include Mozambique and Somalia.
May 6th, 2011 by Tom Minney
The Nairobi Stock Exchange (www.nse.co.ke) and FTSE International (www.ftse.com) are to create new FTSE/NSE share and bond indices. These could be marketed to international investors who monitor FTSE indices, create more revenues for the Kenyan bourse and encourage foreign portfolio investors, boosting liquidity.
According to a report in Business Daily newspaper (www.businessdailyafrica.com), Terrence Adembesa, Product Development Manager at the NSE, said: “We believe this partnership will lay the foundation for the creation of data products, exchange-traded funds (ETFs) and other index-based products and will further attract enhanced foreign investment in the local market.
The NSE recently announced it would introduce a local bond index, starting with treasury bonds.
According to the FTSE Group website, it works with partners and clients in 77 countries worldwide and calculates over 120,000 end-of-day and real-time indices covering more than 80 countries and all major asset classes such as equity, bond and alternative asset classes. It is an independent company jointly owned by The Financial Times and the London Stock Exchange.
The website explains: “FTSE indices are used extensively by a range of investors such as consultants, asset owners, fund managers, investment banks, stock exchanges and brokers. The indices are used for purposes of: investment analysis, performance measurement, asset allocation, portfolio hedging, and creation of index-tracking funds.
“Independent committees of senior fund managers, derivatives experts, actuaries and other experienced practitioners review and approve all changes to the indexes to ensure that they are made objectively and without bias.
FTSE has offices in London, Frankfurt, Hong Kong, Beijing, Shanghai, Madrid, Milan, Mumbai, Paris, New York, San Francisco, Sydney and Tokyo, FTSE Group.
The NSE said they were considering developing the bond index, an equity index, equity sectoral and finally shariah index series and they should be launched during the third quarter of 2011, helping diversify the NSE’s income and enhancing the value of its brand. Mr Adembesa commented: “The agreements have been firmed up within the technical teams for both FTSE and NSE and are awaiting board approvals.” Modalities on the equity and bond index constituents, weighting and calculation are still being worked out. The partnership could work towards developing an East African index series, while maintaining the NSE 20 share and NSE All Share indices.
The newspaper reports that the NSE made KSh35.8 million loss after tax for the year ended December 2009 (compared to a KSh59 mn profit in 2008). Total income was KSh184.5 mn (KSh328.4 m in 2008) of which 89% came from transaction levies, annual listing fees, initial listing fees and application and additional listing fees. Other income was advertising, data vending and sale of publications and merchandising items and this contributed 6% in 2009. According to law, the NSE earns 0.12% of the value of all equity transactions and 0.0035% on bond transactions at the bourse.
Kestrel Capital (www.kestrelcapital.com) executive director Andre DeSimone told the paper that having an international index would add confidence and acceptability among international investors: “Stock exchanges internationally not only make revenue from fees but they also from selling the information. It would also allow international investors to benchmark and compare the performance of other markets with the Kenyan market and exposes Kenya internationally.”
Mr Adembesa said that adopting FTSE’s global index methodology would attract enhanced international investment into the local market and NSE staff would be able to share and knowledge transfer through exposure to FTSE’s calculation systems and global distribution network.
May 1st, 2011 by Tom Minney
The new management of the Nigerian Stock Exchange (NSE) has taken full charge with effect from 29 April, after interim Administrator Emmanuel Ikhazoboh, appointed in August 2010 by the Securities and Exchange Commission (SEC), bowed out on 28 April.
Chief Executive Officer of the NSE, Mr. Oscar Onyema, had taken up office on 4 April, but the SEC had asked for a one-month transitional period. Onyema had been Senior Vice President and Chief Administrative Officer at the American Stock Exchange, according to a statement.
Adeolu Bajomo, the new Executive Director, Market Operations and Technology, is set to start on 3 May, from his previous job as Head of Replatforming Programmes for Africa and Indian Ocean region for Barclays Bank plc. He is to lead operational and technology transformation of the NSE as it repositions for growth and global leadership through effective exploitation of technology and efficient business and market operations processes.
Ikhazoboh told journalists in Lagos that stakeholders should support the new management headed by Oscar Onyema who is expected to constitute a new management team. Reporting on the 8 months of his administration, equity trading grew from N5 trillion (US$32.4 million) to N8.5 trln while bond and other instruments rose substantially from N6 trln to over N10 trln. He said his task had been to restructure the market which had been in crisis so that the SEC had intervened. His administration was able to bring back credibility and investors’ confidence to the market, enhance its overall attractiveness to both local and foreign investors and to fulfil its mandate of putting a new management in place.
SEC noted that after the transition period, Ikazoboh will continue as deputy to the Interim President of the NSE on the NSE Council.
April 11th, 2011 by Tom Minney
Fee income from investment banking in sub-Saharan Africa more than doubled to US$157 million during Q1 of 2011, compared to same period in 2010. Of this $80 mn (51%) was earned on merger and acquisition (M&A) activity, according to a leaflet and press release from Reuters Deals Intelligence.
Uganda attracted 51% of activity, followed by South Africa with 43%, and most of the action was into oil and gas, which China the biggest acquirer, accounting for 26% of the total, followed by South Africa and Luxembourg. Most of the action was in energy and power.
Busisa Jiya, Investment Client Specialists Manager MEA at Thomson Reuters, commented: “The momentum from 2010 has carried on into the first quarter of this year in Sub-Saharan Africa as deal flow remained strong with investors attracted to African assets. Big deals in energy and power helped to make the first quarter a buoyant one for the M&A and debt capital markets”.
A total of $1.9 billion was issued in equity markets in Q1, double the same period in 2010 of which the majority was convertible bonds with $1.4 bn issued, including the biggest issue, a $621.1 mn convertible bond offering from South-Africa based Steinhoff Finance Holding. Most of the equity (58%) was issued in South Africa, followed by Mauritius (29%) and Nigeria (10%)
Fees for investment banks in equity markets totaled $29 million, the strongest Q1 since 2007. There were no initial public offers (IPOs or share offers) during the period Jan-Mar.
Activity on the debt capital market in Sub-Saharan Africa rose 86% to $7.2 bn ($3.9 bn in Q1 2010). The top Sub-Saharan bond during Q1 was $1.7 bn issue by South Africa’s ESKOM Holdings. Investment banking fees from debt capital markets were the strongest Q1 on record at $42 mn.
Barclays Capital topped the rankings with $3.5 mn in fees for work in equity capital markets (ECM) and $13.9 million in debt capital markets for debt transactions totaling $1.7 bn in the first quarter. Investec topped the M&A fee ranking during the first quarter with US$26.4 million. Goldman Sachs topped the M&A ranking for “any Sub-Saharan involvement” with $3.9 bn, with Standard Chartered coming in second with $2.9 bn. BNP Paribas and Citi tied for first spot for Sub-Saharan equity capital markets underwriting during the first quarter of 2011, followed by Macquarie Group.
Thomson Reuters Deals Intelligence is part of Thomson Reuters Investment Banking division and brings up-to-the-minute market intelligence to clients and the financial media through a variety of research reports including Daily Deals Insight, weekly Investment Banking Scorecard, monthly Deals Snapshots and industry-leading quarterly reviews highlighting trends in M&A and Capital Markets.
March 30th, 2011 by Tom Minney
Flows into South African bonds turned positive in the last few days, although money is still being moved out of equities. In the 10 days to 29 March net non-resident purchasing of bonds, including repo, structured trades and other transactions, has totalled R9.3 billion ($1.4 bn) inflow, while non-resident investors in equities have taken out R1.6 bn. For much of 2011 (year to date) investors had followed the global trend of less appetite for emerging markets and there have been outflows from South African bonds and equities. Between 1 Jan and 29 March, net non-resident flows into bonds were outflows of R11.2bn, according to Citi, citing data from the JSE securities exchange. Foreign outflows from equities were another R1.5bn, totalling R12.7 bn. This compared with the record inflows of 2010, being a total inflow of R52.0 bn into all bonds and R37.4bn into equities, totalling R89.4bn.