Archive for the 'Stock Exchanges' Category
March 10th, 2010 by Tom Minney
The Government of Botswana has ended its P5 billion (US$722 million) bond issuance programme with an oversubscribed auction by the Bank of Botswana (www.bankofbotswana.bw) last Friday, 5 March, according to a report in Mmegi newspaper (www.mmegi.bw). The fundraising programme started in 2008 and raises funds for Government investment in large development projects under the National Develolpment Plan (NDP 10).
The central bank auctions Government bonds and treasury bills every six months, in March and September, and the auctions are open to members of the public.
The auction was the first time to launch a new, longer-dated 15-year-bond, providing the much needed benchmark for long-term borrowings. This was reportedly under allotted, with only P195 million of the P700 million on offer being allotted, despite total bids received being P 824 million. This may indicate that the market was demanding a heavier yield than Government was willing to pay.
According to the news report, there was overall oversubscription. The 6-month treasury bill fully allotted at P800 million and oversubscribed by P400 million. The 2-year bond was fully allotted at P200 million against P301 million of total bids received, the 51/2 years was slightly under-allotted, with P192 million of the intended BWP200 million being allotted.
The paper quotes Olebile Makhupe, Head of Global Markets at Standard Chartered Bank: “We have recently observed a shift in the Botswana yield curve with long-term yields picking up, reflecting expectation of higher rates in the future. In addition, long-dated asset yields have in the past reflected excessive demand rather than appropriate pricing for risk or where investors expect rates to be in the future”, she said.
Makhupe added that this trend seems to be changing, as availability of long dated assets has improved in the past few years.
“However, more work can still be done to create a platform for investors to liquidate their bond holdings when they need cash, rather than having to wait for the investment to mature, allowing for what is called secondary market trading,” she said.
According to today’s market report of the Botswana Stock Exchange (www.bse.co.bw), 10 Government bonds and 22 corporate bonds are listed, but trading does not seem very active.
March 10th, 2010 by Tom Minney
The members and directors of the Nairobi Stock Exchange (www.nse.co.ke) have approved the demutualization of the Nairobi Stock Exchange, subject to enactment of requisite laws that will provide the legal framework. A draft law is available on the website of the Capital Markets Authority (www.cma.co.ke).
According to the latest weekly roundup from stockbroker Kestrel Capital (www.kestrelcapital.com), the NSE will change its name to Nairobi Securities Exchange and will have an approved share capital of KES 1bn (US$13 million). In the new proposed ownership structure, Treasury will own 10%, the Investor Compensation Fund (IFC) 10% and stock brokers will collectively own 80%, which they will share equally among themselves.
Newsagency Bloomberg reported that the decision was taken at a meeting on 4 March. It cites Chairman Edward Njoroge as telling reporters that a team has been working on the demutualization and separating ownership from management, as well as the valuation. Earlier, CEO Peter Mwangi said the NSE would trade its shares on the exchange.
March 7th, 2010 by Tom Minney
Conservation tourism pioneer Wilderness Safaris (www.wilderness-group.com) is aiming to get a primary listing on the Botswana Stock Exchange (www.bse.co.bw) and a simultaneous secondary listing on the Johannesburg Stock Exchange’s Africa Board (http://www.jse.co.za/Markets/Africa-Board) on 8 April. The share offer in Botswana and South Africa closes on 26 March. If successful, it will be the Africa Board’s second listing.
The company opened its offer on 26 February. According to Botswana’s Sunday Standard newspaper, the public offer is for 3 million ordinary shares at P4 ($0.5765 in today’s rate on www.xe.com) in Botswana and R4.56 ($0.6167) in South Africa and is fully underwritten. It closes on 26 March. Before the public offer, the company placed 56.3 million ordinary shares by way of a private placement, also at a price of P4 per share, says the newspaper.
According to an announcement on the company website it is “a strategically significant step in its evolution, designed to enable it to take full advantage of growth opportunities, to give the public an opportunity to participate in its future success, to develop a broader shareholder base and to simplify corporate structure.” Wilderness aims to use its tourism model to the fullest in contributing to conservation in Africa.
Growth in this manner is designed to allow the company to fulfil its objective of using its tourism model to the fullest extent possible in contributing to conservation in Africa.
Andy Payne, the CEO of Wilderness Holdings, says: “We believe that our unique positioning, iconic international brand and management’s long track record of financial and operational delivery present investors with an attractive growth and performance platform.”
Wilderness Safaris’ core philosophy is one of building sustainable conservation economies through responsible tourism, which shares the benefits of tourism with local communities and ensures that pristine wilderness areas are protected profitably.
The 26-year-old business is invested in 7 southern African countries and operates specialist travel businesses in 6 countries and 49 aircraft. It employs more than 2,700 people, most of whom come from remote rural communities.
The Chief Executive Officer, Andy Payne was reported in Sunday Standard as saying the company’s strategic objective was to double the number of owned Wilderness bed-nights by 2015, as well as to double the area under its influence by expanding into regions that complement its biodiversity and experience. It owns 53 destinations comprising of 930 beds and further manages 17 destinations with 280 beds.
The website says that Wilderness is “run by a group of likeminded wildlife enthusiasts who came together to build a successful safari business, delivering a unique experience for guests, fair returns for shareholders and stakeholders, while ensuring that southern Africa’s pristine wilderness areas remain sustainably protected.”
Thanks also to www.southafrica.info.
February 21st, 2010 by Tom Minney
According to Zimbabwe’s Herald newspaper (www.herald.co.zw), it is only months before the introduction of a hub-and-spoke interconnectivity model for SADC stock exchanges as “the first significant step towards the integration of one of Africa’s economic regions”.
According to reports, stockbrokers have sought a vehicle to provide information on companies operating in the region, monitor their performance and explore opportunities for clients. Geoff Rothschild, Director: Government and International Affairs at South Africa’s JSE Ltd (www.jse.co.za) and outgoing chair of the Committee of Southern Africa Development Community Stock Exchanges (COSSE), grouping 10 southern African bourses, is quoted as saying the system would “expose our neighbours’ business organisations to local and international investors. This hub will allow exchanges to connect to each other’s platforms and ultimately allow investors to trade on all SADC exchanges through their local brokerage.”
Major investment is needed to upgrade technology for the region’s exchanges and, although many are willing, financing is still being sought. The hub-and-spoke model is being developed by the Mauritius securities market, including the Central Depository and Settlement company, which has experience of capital markets development in other parts of Africa.
Zimbabwe Stock Exchange Chief Executive Emmanuel Munyukwi has been elected chair for the next 2 years. Lusaka Stock Exchange chief executive Mrs Beatrice Kansa is deputy chair. Mr Munyukwi, a former banker, is quoted as saying: “The position will help to put Zimbabwe back on the regional securities map and also enhance the visibility of ZSE to investors.”
CoSSE was established in 1997 and meets quarterly, its members with established exchanges are: South Africa, Namibia, Botswana, Mauritius, Mozambique, Swaziland, Tanzania, Malawi, Zambia and Zimbabwe. Its objectives include increased co-operation and links in operations, communications, regulations, technical skills development and other areas between the stock exchanges and to make SADC securities markets more attractive to local and international investors.
February 21st, 2010 by Tom Minney
The Uganda Securities Exchange (www.use.or.ug) was set to open the Securities Central Depository at the end of last week. The SCD is an electronic system of keeping traded shares records at the stock market in a single location and would end the issuing of paper certificates as evidence of ownership.
According to the Monitor newspaper (www.monitor.co.ug), the SCD was to “go live” on 18 February, quoting Ms Harriet Kiwanuka, the head of trade, research and market development, USE. The move will prepare the USE for electronic trading of shares and is another step towards link-up in the regional markets, including the advanced Nairobi Stock Exchange.
Stockbrokers are set to ask owners of the paper certificates to return them in exchange of electronic transaction accounts, similar to bank accounts.
Ms Kiwanuka is reported as saying both new paper certificates and electronic accounts will be issued until the USE adopts electronic record keeping and trading.
Mr Peter Okoed, the senior portfolio planner at stockbroker Dyer & Blair (www.dyerandblair.com), is reported in Monitor as saying that the SCD will make the exchange attractive to foreign investors who are usually discouraged to invest by the communication that it takes for them to receive their share certificates.
With this system, investors will only trade their shares after getting electronic accounts.
February 10th, 2010 by Tom Minney
There are several initiatives underway to link Africa’s exchanges, chiefly to make them more economically efficient through achieving better liquidity and thus becoming more responsive and attractive to investors. Talks have been continuing for over 15 years, but recently several starts have been made.
One promising initiative is the Africa Board, offering leading African companies the chance to have a dual listing on South Africa’s JSE Ltd. (www.jse.co.za), Africa’s leading securities market, with good trading,clearing and settlement systems. The aim is that the shares would be traded on both the JSE and the home market. However, so far Namibia’s Trustco is the only listing, although talks continue with top listed companied in several African countries and with stock exchanges, regulators and other stakeholders.
Other initiatives to achieve more liquidity, many of which can develop in parallel and most of which should be encouraged, include a hub-and-spoke technology link-up being developed by the Committee of SADC Stock Exchanges and international broker link-ups through stockbrokers such as Auerbach Grayson (www.agco.com), Exotix (www.exotix.co.uk) and Securities Africa (www.securitiesafrica.com).
African Capital Markets News recently visited Johannesburg. We print an EXCLUSIVE email interview with Geoff Musekiwa (Business Development Manager, Africa Desk of the JSE Ltd.) on 2010 prospects for Africa’s securities exchanges.
ACMN: What are your strategic priorities for 2010?
GM: We will be cementing and building on the relationships that we created with all stakeholders in 2009, continuing with the outreach so that there is greater awareness of the Africa Board. Ultimately we expect the traction to culminate in a number of listings on the JSE Africa Board.
ACMN: What developments do you expect on Africa’s securities exchanges in 2010, including in terms of regional integration?
GM: 2009 was a very trying year for most exchanges from a return perspective, with the fortunes of most exchanges only turning towards the end of the year. One hopes that this year there will be renewed confidence in those markets in line with developments in global markets. There have been various initiatives towards integration, notably in East Africa, SADC and West Africa. The extent of progress will obviously differ across the regions and our expectation is that discussions will continue until member constituents find common ground.
ACMN: How is technology affecting the progress of the Africa Board and the African exchanges? What are the significant developments?
GM: There is a move from the exchanges that are still paper-based, to make their trading electronic so that they can make cross-border trading for dual-listed stocks easier and possibly in readiness for eventual integration. International investors also need a certain level of comfort in the systems they utilize to trade and automation is definitely a key requirement. As part of the JSE Africa (ex-SA) strategy, stock exchanges can utilize the existing JSE platform by linking their systems for trading, clearing and settlement. Thus far, only Namibia has taken up this offer.
ACMN: Initially some exchanges claimed the Africa Board would take liquidity, reducing it even further for African exchanges. What is your response? Do you think that stakeholders and exchanges are starting to change their views?
GM: The key objective of the JSE Africa Board was to assist in the development of the other exchanges on the continent. We have looked empirically at the benefits of dual listings particularly regarding liquidity in the home exchange in the long term. When some JSE issuers sought dual listings in London in the 90s, there was a similar outcry from the local stakeholders. In fact the reverse occurred – as the companies increased their pool of investors and accessed more capital they began to have an increased interest from investors, greater following from analysts and were able to transform themselves into truly international companies without losing their identity. The downstream benefit, in addition to increased volumes on the JSE, was an increase in interest not only on those companies but in SA as an investment destination. This is what we would like to achieve through dual inward listings onto the Africa Board. The increase in liquidity of stocks trading on the Africa Board will be the most persuasive argument to the stakeholders that may still doubt the motives of the Africa Board
ACMN: Any details you can give of listings planned or other developments?
GM: It would be premature to give details of expected listings before the announcements are made but stakeholders will be kept abreast of developments at the appropriate times.
ACMN: How is the interest from institutions and brokers? Which stockbrokers can buy and sell on the Africa Board?
GM: Interest in Africa as an investment destination has grown over the years, mainly because of its perceived low correlation with developed markets. Consequently there has been a proliferation of Africa Funds with a distinct mandate to invest on the continent. But there remain a few challenges (some perceived and some real) that hinder the successful and efficient execution of trades including but not limited to liquidity, different regulations and logistical challenges. Brokers and fund managers are naturally excited about the Africa Board because it offers them an opportunity to trade African assets on a platform that they are fairly comfortable with, so we are in effect bringing the rest of Africa to their doorstep. The benefit for the other exchanges will come through over time, as the standard of the Africa Board constituent issuers will demystify any notions that investors may have on African capital markets.
The brokers that can buy and sell on the Africa Board are those that are members of the JSE. Trading can either be done directly through the JSE members, or through brokers in the home country, who will in turn instruct the JSE member. In order to take advantage of the opportunities that the Africa Board offers, it is important that the brokers on the continent foster cross-border execution relationships with each other, thus creating mutual economic benefits for the brokers.
ACMN: What’s the 2010 outlook for African exchanges?
GM: As global markets recover, there are increasing indications that portfolio flows into Africa are beginning to tick upwards. One hopes this will trigger a renewed interest in listed securities and also provide the necessary capital to allow issuers to resuscitate plans that they had shelved amidst the crisis. We stand ready as the JSE Africa Board to assist issuers to achieve these objectives.
February 10th, 2010 by Tom Minney
Financial information company McGregor BFA (www.mcgregorbfa.com) is offering investors new products, Realtime, which will stream data from South Africa’s JSE Limited securities exchange at lower cost. The company will work with customers to see how much customization is needed for them to feed the data into their existing systems.
McGregor product manager Glenn Orford is reported in Business Day newspaper (www.businessday.co.za) as saying it will: “not only deliver a very competitive offering in terms of price and functionality, but our ability to customise the solution based on the client’s specific requirements will undoubtedly make it quick and easy to slot into existing systems.”
The fee could be a flat monthly rate or a fee per user and could also vary if the client wanted financial ratios and other components. According to operations manager Sandy Kerkhove the product could be as low as R55 (US$7.14) per month per terminal, excluding undefined JSE royalties.
McGregor says it aims to provide real-time foreign exchange rate data within the next two to three months and it is deciding whether to include other exchanges beside the JSE. McGregor reportedly has not decided whether or not to introduce real- time coverage of securities exchanges other than the JSE.
According to the company website: “The McGregor BFA Realtime product set provides a platform for both the corporate and private user to view real time stock market information streamed live to your desktop.”
The offering includes: Pure Internet delivery, live streaming prices, live indices and stock market announcements service (SENS), user portfolios and selective ticker.
February 5th, 2010 by Tom Minney
The closure today (5 February at 5pm local time) of the share offer of Uganda’s National Insurance Corporation Limited (www.nic.co.ug) is likely to result in a rush for shares. It is the first listing on the Uganda Securities Exchange (www.use.or.ug) since 2006 and the amount on offer is small, totalling 161,552,000 ordinary shares – 40% of the issued share capital – at a price of Uganda Shilling (UGX) 45 or 2 US cents per share.
The total amount is UGX7.3 billion (US$3.7 mln).
The sale of shares is by the Government of Uganda, which says the price is subsidized. Ugandans get priority and the minimum purchase is 2,000 shares.
According to the NIC website: “This IPO marks yet another milestone in the deliberate use of the divestiture process in Uganda as a core catalyst for the development of the capital markets in the country.
“The Government of Uganda has to-date privatized 6 of Uganda’s successful public companies by way of IPOs. The companies namely are; – Uganda Clays Limited (UCL), British American Tobacco Uganda Limited (BATU), Bank of Baroda (U) Limited (BOBU), DFCU Limited, New Vision Printing and Publishing Company Limited (NVL), and Stanbic Bank Uganda Limited (SBU).”
4% of the issued shares has been reserved for the permanent employees of NIC at the IPO price.
In June 2005 the Government had sold 60% of the shareholding in NIC to Industrial and General Insurance Company Limited (lGI) of Nigeria (www.iginigeria.com), a leading West African insurance company, after a bidding process. NIC was set up in 1964 by Act of Parliament.
According to a report in The East African, Joseph Kibuuka, a research and market development officer at Crested Stocks and Securities, says: “This IPO is not the most exciting we have had. But the market was hungry for something to reignite it and NIC has provided that.”
One question mark in investors’ minds had been outstanding debts of UGX17.7 billion accrued in handling Makerere University’s Deposit Administration Plan – a staff retirement scheme – between 1996 and 2005.
February 4th, 2010 by Tom Minney
A new CEO started work at the Dar es Salaam Stock Exchange (www.dse.co.tz) and share prices surged in the following days, although market participants denied any connection with the appointment.
The governing council of the DSE appointed 46-year-old Mr Gabriel Kitua, replacing Jonathan Njau, whose tenure has expired after serving 2 terms of 3 years each. Previously Mr Kitau was director of research, policy, planning and information technology for seven years at the Capital Markets and Securities Authority (www.cmsa-tz.org), which regulates the DSE. Peter Machunde, chair of the DSE governing council, was reported in local media as saying that the new CEO had the requisite skills and experience “to take the stockmarket forward in the next phase of its development.”
Share prices climbed in the following three days, but Orbit Security senior broker, Florian Kahabi was quoted in the press as saying: “There is no relation between the CEO’s appointment and trading at the market as it is driven by supply. January is back-to-school month and parents are disposing their shares to offset fees obligations.”
It is a paradox of that selling shares into illiquid markets that increased supply can lead to more trading and prop up prices.
February 2nd, 2010 by Tom Minney
The Rwandan capital markets are set for growth in 2010, including plans for a first local initial public offer (IPO) and developing the Rwandan stock exchange. In an interview with East Africa Business Week (www.busiweek.com), the Executive Director of the Rwanda Capital Market Advisory Council (www.cmac.org.rw) Mr. Robert Mathu outlined what to expect.
The first public offering of shares could come “very soon”, he said: “We are working on BRALIRWA and it will come very soon because it is a big company and it will meet all requirements. However, with small companies, I am looking at two years.” Brasseries et Limonaderies du Rwanda (www.bralirwa.com) is the only brewer and estimated to have 95% market share, as well as the Coca Cola franchise. It is owned 70% by international Heineken Group and 30% by the Rwandan Government. According to previous reports, the Government wants to sell 25% to the public and 5% to Heineken, but was examining applications to be the transaction adviser and sponsoring broker.
Other future transactions could include Government selling shares in cellphone company MTN Rwanda (www.mtn.co.rw) and insurance company Sonarwa (www.sonarwa.co.rw), which is estimated by Government to have 75% of all insurance premiums.
The Rwandan Government has also said that it wants to sell off its shares in other profitable firms but Mr Mathu says these companies are not in a hurry to go public: “Many of them may not have all the requirements because they have not bothered. They have had no reason in the past to try to meet the requirements. For example, one of the basic requirements is that a company must provide audited financial statements. In Rwanda, companies used to prepare accounts only to convince the taxman that they are fine. However, this is not enough for us; we have to see what accounting system they are using, the quality of accountancy and their corporate social responsibility.
Rwanda is framing the capital market through 3 pieces of legislation: 1) The law establishing the future Capital Market Authority; 2) A law regulating capital markets; and 3) A law regulating the Collective Investment Schemes (CIS). The market is waiting for a law to split the Rwanda Stock Exchange from CMAC, which established the Rwandan Over-The-Counter market 2 years ago and will continue to be involved, but would also seek to recruit energetic people to develop and run the future RSE.
Mr Mathu says that collective investment schemes (normally pension funds, insurance funds and collective savings plans such as mutual funds and unit trusts) as critical to market development: “CIS contribute a very significant proportion in the development and deepening of the capital market because without a collective investment scheme every investor would invest directly in the market. We needed the law to make sure that investment managers handling the money has the right qualification and that they have to disclose their investment strategies and policies to the public.”
He adds that Rwanda has benefited from membership of the East Africa Securities Regulatory Association (EASRA) and East Africa Stock Exchanges Association (EASEA). It is part of plans to develop an integrated East African capital market and also part of an agreement with the International Finance Corporation to develop this. Mr Mathu said the dual listing of Kenya Commercial Bank shares is a learning opportunity: “KCB cross listing has helped us to assess our system in terms of being able to serve investors by accessing and buying shares. Therefore, it has given us a lesson, we are working on it, and very soon, you will see us conducting our equities business more effectively.” Eventually Rwanda will introduce electronic trading in securities, which is the route for integration with the regional securities market.