African Capital Markets News » Stock Exchanges

British small-cap stockex PLUS-SX up for sale

Tom Minney — Sat, 04 Feb 2012 11:16:09 +0000

PLUS Markets (www.plusmarketsgroup.com), a British-regulated investment exchange for trading the shares of small companies, has put itself up for sale on 3 Feb. According to a press release, the company says it has spent 2 years investing heavily in repositioning itself as a trading solutions services provider alongside its roots as a stock exchange.
The Board of Directors says it is “well positioned strategically to exploit commercially the opportunities offered by significant changes in the regulatory and technological environment”. The Board has decided to conduct a formal sale process “in order to identify appropriate potential partners for the Company or major strategic investors”. It calls on potential offerors for the entire issued and to be issued share capital to contact their adviser, Wyvern Partners (www.wyvernpartners.com, Anthony Gahan +44 207 355 9857).
Plus Markets Group plc describes itself on its website as a “next-generation” stock exchange and a market operator under the European Union Markets in Financial Instruments Directive (MiFID) on Recognised Investment Exchanges (RIE). It operates a regulated market and multilateral trading facility (MTF). PLUS is the holding company for the PLUS Stock Exchange (PLUS-SX) and the PLUS Derivatives Exchange (PLUS-DX).
As an RIE, PLUS-SX can provide trading and listing services in the full range of financial instruments including cash, equities, derivatives, bonds and commodities. It provides cash trading and listing for UK and international companies with a range of markets through fully listed and growth markets to access capital. PLUS-DX offers derivatives and technology services and plans to offer short-to medium-term interest-rate related products. “We have designed PLUS-DX’s services to meet the changing regulatory and commercial landscape.”
PLUS Trading Solutions (“PLUS-TS”) responds to the growing demand from market participants to segregate or create their own matching systems and delivers a competitive, fully managed matching and surveillance service, designed to help firms satisfy new regulatory requirements. The group brings “product innovation and competitive pricing to market participants by operating a low cost base RIE. PLUS offers a neutral trading environment, wholly independent of any market user.”
The Board of PLUS adds: “scale and international reach will become increasingly relevant for interaction with exchanges, investment banks and other trading entities.”
According to a story on Reuters, the company reported a loss of GBP5.8m ($9.2m) on revenue of GBP3m in 2010, its sixth consecutive loss-making year. PLUS grew out of Ofex, an exchange for British small-cap stocks that required less regulation than the London Stock Exchange or AIM. The share price was at 1 penny.
“The Board believes that it is in the best interests of the Company to seek a partner which will help it achieve the scale and reach required to maximise value to stakeholders.”

East African investors opening accounts at Nairobi Stock Exchange

Tom Minney — Wed, 04 Jan 2012 11:41:29 +0000

Although the number of investors from other East African countries opening trading accounts at Kenya’s Nairobi Stock Exchange (www.nse.co.ke) is still very small, it is growing more consistently in the last 2 years than other categories of investors. According to data to 30 Sept released by Kenya’s Capital Market Authority (www.cma.or.ke), East African individual investors opened 97 securities accounts at Kenya’s Central Depository and Settlement Corporation (www.cdsckenya.com). This compares to 92 accounts opened in the full year 2010 and 79 in 2009.
By comparison Kenyan individual investors only opened 27,669 accounts in the 9 months to September 2011, compared to 120,756 accounts opened in 2010 and 52,836 in 2009. Kenyan equity trading has remained subdued as investors say high interest rates make them choose government debt securities over equities.
One potential reason for the East African interest, according to an article in the East African , is that Ugandans are opening trading accounts at the NSE in anticipation of the IPO of electricity distributor Umeme (www.umeme.co.ug) scheduled for 2012. Umeme is expected to cross-list at the NSE and the Ugandan Securities Exchange (www.use.or.ug). Some investors open multiple accounts ahead of a potentially “hot” initial public offering (IPO) of shares, where they hope to sell their initial allocation quickly and make a quick profit, as this is likely to maximise their share of allocation if the IPO is oversubscribed.
Trading experience shows that cross-listed East African shares such as Centum, Kenya Airways, Jubilee Insurance, trade more on the NSE compared with the Dar es Salaam Stock Exchange (www.dse.co.tz) and USE. The increased liquidity in Nairobi means that East Africans are better off having a trading account at the NSE. The paper comments that Rwandans, Tanzanians and Ugandans are probably realising this fact and also taking positions ahead of the listing of some of their firms on the NSE by opening more CDS accounts in Nairobi: “Investors will go the extra mile to open and operate, as proxies, CDS accounts in the names of their relatives or friends who know nothing on trading in shares. Expect an influx of Rwandese, Tanzanians and Ugandans at the NSE in 2012.”

FTSE Group working on Pan-Africa index with African Securities Exchanges Association

Tom Minney — Wed, 21 Dec 2011 09:02:16 +0000

Dateline – Marrakech
FTSE (www.ftse.com) is working on a FTSE-ASEA index with the African Securities Exchanges Association (www.africansea.org), which will help to unlock Africa an investment for larger portfolio investors. According to Imogen Dillon Hatcher, Executive Director, FTSE Group, speaking at the ASEA conference in Marrakech, Morocco, on 12 Dec, the index will make clear how much Africa is outperforming the rest of the world: “A ‘back-cast’ of the FTSE Africa index performs better than FTSE world index by quite a margin”. The index covers stocks on 16 exchanges and is adjusted for investibility, including free float and liquidity.
She said that FTSE Group was restructured on 12 Dec, with the London Stock Exchange Group buying out the 50% share owned by Pearson, owner of the Financial Times newspaper, “as of this morning”. The buyout transaction is set to close in the first quarter of 2012. FTSE calculates and manages over 200,000 indices worldwide, which are linked to over $3 trillion in global assets under management. These include the widely-used global benchmark, the FTSE All-World Index. She said FTSE is the top index group worldwide: “FTSE is known as a partner around the word, FTSE works with you to unlock the investment potential that is your market.” As markets mature, broader ranges of investible tools are needed including a reliable index that can promote the development of a wider range of investment products, including exchange-traded funds (ETFs).
The group had a strong commitment to Africa and already been working with South Africa’s JSE Ltd (www.jse.co.za) since 2002. In December 2010 they signed with the Casablanca SE (www.casablanca-bourse.com) to create FTSE CSE Morocco Index Series with two index products. On 8 November 2011 FTSE announced a partnership with the Nairobi Stock Exchange (www.nse.co.ke) to create new indices. FTSE NSE Kenya Index Series track the performance of the largest and most widely-traded stocks listed on Africa’s fourth oldest securities exchange.
Dillon Hatcher said FTSE China indices form the basis for $14 billion worth of ETFs, including giant funds by iShares. The group had worked to develop the indices with international and domestic managers including Xinhua Finance Ltd. She added: “We know something about building an index” and the ASEA index would “throw the light of transparency onto your markets”.
The work of developing the ASEA index had been led for over a year by Jonathan Cooper, Managing Director Middle East and Africa, working with a broad range of African exchanges. The target was to build an investible index, with clear and transparent rules and methodology. They started with all African companies; then filtered for those whose price information is available on Bloomberg and Thomson Reuters. They looked at securities types, adjusted for a minimum 15% free float (the proportion of shares potentially available for buyers) and did liquidity testing on the securities and then did country weightings. The index now covers 16 countries, which have securities which meet the requirements.
The new index will be reweighted twice a year. Dillon Hatcher added that FTSE would be working with a prospective client base to put forward this pan-Africa index: “We hope funds will come out of this and drive Africa as an investible destination, make sure the index stays fresh and make it sure it stays relevant, as the client base comes to us with ideas, such as sectoral indices.
She also explained how securities markets indices had evolved. It started as a general economic indicator, showing how share prices are moving as an indicator of investors’ expectations of business prospects. Then indices became a tool for benchmarking but were still simple measurement tools. From this they became an underlying framework for more passive asset management such as ETFs, and depending on market these could be simple or ever more complex, depending on the needs of organizations such as asset managers or investment banks. Eventually they would also develop into a tool to assess market risk, with much potential to get involved in top-end investment strategy, where “we are starting to blur the lines between passive and active management”.
She threw down the gauntlet to active managers “We would assert that over time it is very hard for an active manger to beat an index, we have done lots of work with academics.” She said indices bring market benefits including low-cost market access provided they are transparent, rules-based and useful. “All the name-brand indices have to be fit for purpose and they have to do a job. You know they will behave in a particular way.” At other meetings this author has heard exchanges have wondered about the future of securities markets when the volume and value of derivatives and ETFs traded far outweighs the trade in the actual shares.
Commenting on the transaction in which the LSE buys out Pearson, LSE CEO Xavier Rolet commented in a press release: “Fully aligning FTSE with one of the world’s most liquid and most international trading groups is an exciting opportunity. This transaction further delivers on our diversification strategy, expanding the London Stock Group’s existing offering deeper into indices, derivatives and market data products and services. This is a business we know well, and we expect that going forward our customers will directly benefit from greater choice, opportunity and innovation.”

Zimbabwe Securities Commission refuses licence for ZSE bourse

Tom Minney — Sat, 17 Dec 2011 18:45:57 +0000

The Securities Commission of Zimbabwe (www.seczim.co.zw) has declined to grant the Zimbabwe Stock Exchange (www.zse.co.zw – under maintenance), an operating licence, according to local media, and is challenging the exchange to provide a business plan. The Financial Gazette reports that the ZSE failed to provide critical information demanded by the regulator. ZSE CEO, Emmanuel Munyukwi, reportedly dismissed the SECZ claims, saying the exchange had complied with all requirements in terms of the law: “There is nothing like that. As far as I know we have confirmed and verified that all the required information is with the regulator,” he said.
According to a report in Zimbabwe Independent SECZ CEO Tafadzwa Chinamo summoned all members of the ZSE to attend a meeting. The Commission is reported to be concerned that the exchange has not automated and done away with the current paper-based trading system, despite suggesting that could happen by the end of 2011. However, the call-over meetings in Zimbabwe are often more active and lively than the screens of some of the less liquid African exchanges, which may even only record a few deals a day.
SECZ also said only 3 out of 20 stock-broking firms had been registered by the commission as having sufficient capitalization to continue and would issue their licences by circular. The regulator said there was concern that the exchange and most stock-broking companies did not get enough income to cover their expenses and remain viable, due to falling trading volumes. The Commission charges a yearly fee of US$3,000 for stock-broking firms and US$1,500 for individual stockbrokers.
According to the reports, the SECZ accused members of abandoning the exchange, given its current state of affairs, saying they needed to be proactive in the development and running of the exchange. It issued a circular to stockbrokers saying the ZSE had to comply with its licencing requirements and had to provide SECZ with information specified in Section 30 of the Securities Act, like other capital market intermediaries and “given that it operates as a Self Regulatory Organisation”.
The capital markets regulator reportedly wrote: “It is worrying therefore that the commission has not yet issued the ZSE an operating license due to the failure by the ZSE to provide the required information. Of particular concern to the commission is the non-submission of the 2010 financial statements which would enable the commission to verify the exchange’s capital adequacy. Also of concern is the lack of a business plan to satisfy the commission that the ZSE is working towards specific goals in developing the market.
“The exchange is owned by the members and as such it is the responsibility of members to ensure its smooth running. Members have a responsibility to resource the ZSE and see to it that the necessary management structures are established and supervised for the day- to-day operations of the exchange,” said Chinamo. “As the Commission we have reason to conclude that members have abandoned this responsibility and we seek to establish members’ position.”
The meeting was adjourned after brokers failed to reach consensus and they have nominated a 5-member committee, working under acting ZSE board chairperson Eve Gadzikwa, to sort out several issues affecting the viability and integrity of the exchange and report within a week. The committee includes veteran stockbrokers, Tediuos Matsaira, Bart Mswaka, Jeff Mhlanga, Edward Mapokotera and Rufaro Zengeni.
Chinamo reportedly added: “Given the important role members play in operating the exchange the Commission is concerned by the non-transparent manner in which new members are admitted. Several applications are awaiting approval months after submission resulting, in a number of firms operating without two brokers as stipulated in the SEC rules.” One broker was reported as saying that only having 30 stockbrokers was a limitation: “I believe that if the membership grows the bigger the pool of ideas we have and this can increase the pace of transformation of the market,” a leading broker indicated.

Tunisia Stock Exchange positive on economic prospects

Tom Minney — Mon, 28 Nov 2011 16:50:17 +0000

Share prices on the Tunisian Stock Exchange (Bourse de Tunis – www.bvmt.com.tn) have been moving ahead all November, starting with a positive reaction to the meeting between Rachid Ghannouchi, leader of the Islamist Ennahda party and stock market executives only days after the election and moving forward as the politics progressed well. Even before the election results were finalized from the 23 October election that swept Ennahda to power, Ghannouchi was meeting the bourse on 26 Oct to send the message that the government would be “business friendly”. It is the first Islamist party to win power since Hamas’ 2006 victory in Palestine.
According to Bloomberg, the TUNINDEX dived from a close of 4636.67 on 20 Oct to 4538.41 on 24 Oct, but bounced back very fast and reached 4718.16 by 8 Nov. The index has been moving sideways since 4730.69 close on 18 Nov, back to levels last seen in early February. The low was 4033.43 on 25 Feb. The recent high was 5695.82 on 30 Sept 2010.
According to a report on Reuters, a party official said Ghannouchi met the market executives “to send the message that the stock exchange is very important and that he is in favour of more listings to accelerate economic growth and to diversify the economy.” Reuters adds that the Tunis stock market index fell sharply when trading resumed after the Sunday election, but rallied on news of the meeting and prices were up 1.13% by mid-morning.
Reuters reports that Ghannouchi spent 22 years in exile in Britain and has stressed his party will not enforce any code of morality on Tunisian society, or the millions of Western tourists who holiday on its Mediterranean beaches: “He models his approach on the moderate Islamism of Turkish Prime Minister Tayyip Erdogan”, according to writers Tarek Amara and Christian Lowe.
Tunisia’s Constituent Assembly held its historic first session on 22 Nov and Ghannouchi signed a coalition agreement with the heads of two junior coalition partners, Moncef Marzouki of Congress for the Republic and Mustafa Ben Jaafar of Ettakol. In the election, which saw a turnout of over 90% of registered voters, Ennahda took 89 seats of the 217-member assembly, Congress won 29 and Ettakol 21. Under the new agreement, Ennahda secretary-general Hamadi Jbeli will hold the most powerful post of prime minister, while Marzouki will be in the largely ceremonial role of Tunisian president. Ben Jaafar will be speaker of the assembly, which has the task of drafting a new constitution. They pledged to hold elections within a year.
There is a challenge to get the economy moving. Reuters cites Central Bank of Tunisia (www.bct.gov.tn) governor Mustafa Kamel Nabli saying on 24 Nov that the economy grew 1.5% in the third quarter but growth in 2011 will be close to zero. Unemployment stood at 18.3%. However, the draft budget presented earlier in November foresees 4.5% growth in 2012, after 3.7% growth in 2010. Nabli told Reuters “”We expect GDP growth of 4 percent next year but the European crisis will dampen these figures.” The World Bank, European Union, the African Development Bank and the French development agency has been giving an emergency $1.4 billion funding package. Nabli said another $5 bn will be needed next year to support the budget.

African Stock Exchanges Association conference tackles key issues

Tom Minney — Fri, 28 Oct 2011 14:02:27 +0000

The next step for Africa’s securities exchanges is critical for the continent’s development. There is a huge demand for capital to be put to productive use in what could be the world’s fastest-growing continent, with a dire need for fast growth to drive out poverty. There is also a tide of international risk capital, looking to fund that growth and share in the profits. Between the two are the capital markets, challenged to move fast to become liquid, transparent and effective.
Lots of these topics are on the agenda for The 15th Annual African Securities Exchange Association conference (www.aseaconference2011.ma) (in Marrakesh, Morocco), which looks to have an excellent agenda. Casablanca Stock Exchange is the host, the theme is “Africa, alive with opportunities!”
Top speakers include key opinion leaders such as Thomas Friedman, Mark Mobius and maybe Christine Lagarde of the IMF. Expect speeches from Sunil Benimadhu (Stock Exchange of Mauritius and chair of ASEA), Karim Hajji of the Casablanca bourse, leaders of African securities markets and top speakers from several world bourses including BM&F Bovespa, Istanbul, NASDAQ OMX and the London Stock Exchange, with India’s National Stock Exchange and NYSE Euronext to confirm. They will be joined by finance ministers, bankers, analysts, traders, investors and many more.
Topics on day 1 include
• “The financial crisis: Is there a pilot in the plane?” Top analysts, bankers and traders, possibly joined by a European Commissioner from the heart of the crisis
• The economic implications of the “Arab Spring” for the continent, featuring key Ministers who are rebuilding post-crisis countries, a strategist and others
• Capital markets and BRICS (see previous story on stock exchange link-ups) – hear from CEOs and Executive Directors of key BRICS stock exchanges and Emergent Asset Management
• Nursing Africa’s future IPOs: heads of top African stock exchanges from Mauritius to Morocco, via Ghana and maybe Nigeria, plus PAI Partners, a leading French private equity firm
• A new FTSE-ASEA African index.
Day 2 tackles
• Regulation for cross-border development: Regulators from Morocco and the central African stock exchange, plus long-term Africa bull stockbroker Jonathan Auerbach
• Cost-effective and scalable technology options for emerging markets exchanges – featuring Tony Weeresinghe of the LSE, Anne Ewing of NASDAQ and maybe Joseph Mecane of NYSE Euronext, 3 top suppliers of securities markets systems to the continent who hold many of the keys to the next stage of evolution.
• “What’s hot in Africa today?” with a host of top speakers from politics, consulting, banking, mining, economics and development finance covering energy, infrastructure, mining, industry, agribusiness and others.
OPINION: Please note the Day 2 morning topics address critical and urgent issues of how African stock exchanges can work across (colonial) borders to build liquid and effective markets, part of the grand process of African integration and building viable economies.
Expect participants from over 100 countries. The ASEA AGM and committee are on 11 Dec and the conference starts on 12 Dec. The official language is English with Arabic and French translations.
Unmissable! Book the conference here via the ASEA website (www.africansea.org).
Warning!! You may not want to come home. The conference is in Hotel Palmeraie Golf Palace & Spa. The conference website says: “As a backdrop, the majestic, silvery, sentry-like summits of the High Atlas stand out. At the foot of the mountain lies a beautiful city, built in red and surrounded by age-old palm trees. Monuments defying time form a string of pearls for her. An enticing labaryinth, created centuries ago, of old ramparts meanders along its slender “body”. In this fairy-tale decor, lies Marrakesh the legendary; Marrakesh the imperial, the pearl of the south, bathed by an invigorating sun all year round.”

Mobius remains bullish on Nairobi Securities Exchange, says FT

Tom Minney — Fri, 28 Oct 2011 12:21:18 +0000

Mark Mobius, the veteran emerging markets investor and head of Templeton Emerging Markets (www.franklintempleton.com), is bullish about the Nairobi Securities Exchange (www.nse.co.ke), although it is the worst-performing stock market in sub-Saharan Africa this year, according to an article on 27 October in the UK’s Financial Times.
According to the article, by Katrina Manson: “A long-term investor, Mr Mobius makes his money from yo-yoing frontier markets. Kenya’s has see-sawed between losses of 41.4% after post-election violence in 2008 to best sub-Saharan performer excluding South Africa last year, with a rise of 28.3%. Domestic investors tend to have both less money and less time to play with.” She also cites Aly-Khan Satchu, chief executive of Rich Management (www.rich.co.ke), a Kenyan financial services firm as saying the 2011 collapse is a “rout”. Domestic confidence is low, including among many of the 800,000 people who invested into Safaricom’s 532% subscribed IPO (KSh5 in the 2008 IPO, KSh3.05 at present).
Kenya has seen currency weakness, foreign capital flight, high inflation (it was 17% in September) and drought. The NSE has seen big cuts in volumes and much less participation by foreigners, who used to dominate trading, partly because of a global flight from risky assets. Share price indices have slid, losing the strong gains of 2010. Local investors see better gains from bonds, real estate and family firms.
The IPO of British American Investment Company Kenya only achieved 60% of its target (as reported on this website) and Kenya Airways seems to be holding back a share offer in which it wanted to raise $250 million for expansion. According to the article, Satchu said: “You can’t be issuing IPOs that flunk at the first hurdle. There has not been a successful IPO since Safaricom and that has impaired the stock market. They need a flagship discounted offer and will languish until they do it. Right now, the government couldn’t raise tuppence.”
The also article quotes Stella Kilonzo, head of the Capital Markets Authority (www.cma.or.ke), as blaming the stressed economy. She says there have been 3 years of reforms to boost disclosure and set more stringent requirements and these will eventually pay off. This year the NSE was renamed a “securities” rather than “stock” exchange in anticipation of a new bond index, futures and derivatives trading, exchange-traded funds and a new small and medium sized business index among others. If these come into operation, diversification could help the market.
There is still a cloud over the bourse from a scandal after stockbroking firms collapsed owing their clients money, some after allegedly trading their clients’ money illegally. No-one has yet gone to prison although court cases continue, and not everyone has been compensated, partly because the compensation fund does not have enough resources. Ms Kilonzo says regulation is now tighter.
Reportedly, a court case against the CMA by a collapsed brokerage firm that has been under statutory management since 2007 last month halted a plan to demutualize the NSE, including selling part of it and listing its shares on the Nairobi bourse. According to some analysts, demutualisation could help clean up the market by separating stockbrokers from the exchange’s owners.
Sentiment may be changing, after the Central Bank of Kenya (www.centralbank.go.ke) moved aggressively to push up interest rates by 4 percentage points this month, which may stabilize the currency and bring back investors. Good rains and strong investment in infrastructure could fund growth in 2012, although worries remain about elections.
Manson quotes Mobius: “People are fearful of coming in, so whoever goes there makes a bundle. We may go and buy more at a cheaper price.” The Frontier Markets Fund is invested in Kenya Airways and Safaricom.

Nigeria’s Securities and Exchange Commission (SEC) to set up Investor Protection Fund

Tom Minney — Tue, 25 Oct 2011 16:43:28 +0000

The Securities and Exchange Commission Nigeria (www.sec.gov.ng) is considering setting up an Investor Protection Trust Fund. This comes after news that no-one has ever claimed from a reported N500 million (US$3.2 million) fund for investor protection at the Nigerian Stock Exchange (www.nigerianstockexchange.com) set up after a 1996 white paper on capital market reform.
Each stock-broking firm initially paid N1 million to the NSE fund as a contribution and all stock-broking firms have contributed. The fund has grown over more than 14 years to over N500 million in a fixed deposit at a bank, which in turn is backed by Fidelity Guarantee Bond. The fund is to compensate investors whose monies are trapped in cases of insolvency, bankruptcy or negligence of a stock-broking firm. An investor is entitled to a maximum claim of N14 million, depending on the amount deposited or sales proceeds unpaid at the time of the demise of the stock-broking company. NSE Head, Corporate Communications, Wole Tokede, was recently quoted in local newspaper The Daily Independent as admitting the existence of the fund, but he said there has never been a withdrawal from the NSE fund, possibly because of lack of knowledge among investors.
Director General of the SEC Arunma Oteh commented that the NSE fund “has not been as active as it ought to be. We shall write to NSE to ensure that the fund is administered accordingly.”
Ms Oteh said in September 2011 that the SEC will set up another fund to protect investors in the market, as provided for in the Investment and Securities Act (ISA) 2007. She expects that part of the money could come from recoveries from 260 capital market operators and individuals referred to a special Investments and Securities Tribunal in 2010, as the SEC has asked the IST to make the operators disgorge the profits gained from the illegal market activities. w, as by its predecessor. The fund would compensate investors who are defrauded by market operators. Typically an investor protection fund makes investors more confident in a capital market, as they know their funds are safe if their stockbroker runs into problems. However these funds do not compensate investors for share price movements or when investee companies or world markets run into problems.

Bigger role for African Development Bank, considering move back to Cote d’Ivoire

Tom Minney — Thu, 20 Oct 2011 04:21:35 +0000

Moving back to Cote d’Ivoire may be on the agenda for the African Development Bank (www.afdb.org), according to an interesting story on the website www.devex.com (you may have to sign in to read it?). The bank fled from Abidjan in a rush in 2003, as rebels advanced on Abidjan in the brutal and all-encompassing civil war. Now the new Cote d’Ivoire President Alessane Ouattara wants it back. and it was on the agenda at the bank’s AGM in June in Lisbon, although it may take up to 3 years before this happens.
The article also notes that the bank is increasingly important and playing a bigger role as an African institution in channeling funding to African projects.
In January 2011, the bank lived through Tunisia’s jasmine revolution, although one bank staff member told me that it did not much affect the area around their building, as street action was mostly concentrated in other parts of town. They did miss a few days work, before bosses had them back in action.
According to the article, AfDB president Donald Kaberuka said uncertainty over the permanent location of the bank had a “significant effect” on morale, frustrated “horizon planning” and was difficult for the human resources department. Some bank staff may be happy to leave Tunis, others not.
Ouattara, who got into power in April 2010 after being blocked by his predecessor, Laurent Gbagbo who disputed the election result, is moving fast to re-establish Abidjan as the financial hub for West Africa and has been lobbying hard for the bank. It is not sure what the criteria for the move are, but it is possible they will need to see at least another successful multi-party election and a period of stable government.
The AfDB attended Ouattara’s inauguration and was a leader in an accelerated package of loans to help the new administration and initial renovation has started for the bank’s headquarters in Plateau district, according to the article.

New confidence, bigger role going forward
Then bank also led multilateral lenders to sign of $1 billion in loans to Tunisia’s new administration. Kaberuka, a former finance minister from Rwanda, reportedly says that after the political shocks, swift intervention can limit collateral damage. The African Development Bank is credited for its role after the 2008 global financial crisis in encouraging African states to apply fiscal restraint but to ease potential economic disruption through investment in infrastructure, and many countries are praised for successful countercyclical interventions.
The article also argues that the bank is increasingly the biggest and best bet for Western donors who are its principal shareholders. Experienced author Mark Ashurst writes: “As the bank’s loan book grows bigger and more diverse, donors, including the United States, Germany and the United Kingdom, are keen to devolve the task of managing their African exposure to an African institution.” He adds that the bank has done a skilful job of developing a terminology that avoids words such as “conditionalities” and uses “policy-based lending” and success in developing the skilful balancing acts required to work with nations. It also reflects aspirations for greater African voices in international development policy and it is likely that more international financial institutions could devolve administrative work to the AfDB.
In 2010 the African Development Bank passed the World Bank and became the leading source of multilateral financing for new African infrastructure. The same year, the bank’s sixth general capital increase included pledges to treble the bank’s reserves to $100 trillion by 2021, signalling new confidence. The bank’s loan book is stsill less than the sum of China’s resources-for-infrastructure swaps but the AfDB is much more closely involved than other lenders in African institutions such as the African Union and the Economic Commission for Africa and has a unique standing in the regard with which it is seen in Africa.
The article goes on to argue about the bank’s changing role as growth of 5% a year or more becomes the norm in Africa for coming years. This includes work to support bond and capital markets and leveraging private capital (20%), infrastructure (40%), budget support (20%), industries, including mining and manufacturing (20%). It is well worth reading Mark’s article in full here.

BRICS stock exchanges form alliance

Tom Minney — Sat, 15 Oct 2011 15:12:58 +0000

The securities exchanges of the “BRICS” emerging market bloc have announced a joint initiative to expose investors to the dynamic economies of the bloc members, Brazil, Russia, India, China and South Africa. China and India are among the fastest-growing major economies over the next five years, according to forecasts, and all are increasingly attractive to investors worried about stagnation on US, European and other major exchanges. The initiative was announced on 12 October, during the 51st AGM of the World Federation of Exchanges (WFE), held in Johannesburg.
The stock exchanges will start by cross-listing benchmark equity index derivatives on the boards of each of the other alliance members. Following that, the alliance will develop innovative products to track the BRICS exchanges.
This brings together Brazil’s BM&F BOVESPA stock exchange, MICEX from Russia (currently merging with RTS Exchange), Hong Kong Exchanges and Clearing Limited (HKEx) as the initial representative of China, and South Africa’s JSE Ltd (the Johannesburg Stock Exchange). The National Stock Exchange of India (NSE) and the BSE Ltd (formerly known as Bombay Stock Exchange) have signed letters of support and will join the alliance after finalizing outstanding requirements.
The seven stock exchanges represent a combined listed market capitalization of US$ 9.02 trillion (source WFE and RTS website) with listed 9,481 companies2, equity-market trading value of US$ 422 billion per month and over 18% of all exchange-listed derivative contracts traded by volume worldwide (source Futures Industry Association) as of June 2011.
Ronald Arculli, chairman of HKEx and of the WFE, says in a press statement: “Global investors are increasingly seeking exposure to leading developing markets. The close relationship of the BRICS stock exchanges is behind this initiative, through which investors worldwide will gain easier access to benchmark equity index derivatives, which will now be offered in local currency on these exchanges. These cross-listings are planned to take place by June 2012.”
He adds that this is an important moment in the history of developing countries: “The alliance enables more investors to gain exposure to the BRICS bloc of emerging economies, with its increasing economic power. From a global perspective this alliance points to the growing relevance of the BRICS economies and financial markets in the coming decade and further underlines the reason for the BRICS relationship.”
Russell Loubser, CEO of the JSE, says: “As well as being barometers of market performance, indices also form the basis of other tradeable products, including exchange-traded funds. As a logical second phase in the alliance, the exchanges have agreed to work together to develop new products for cross-listing on the respective exchanges.” These products would combine exposures to equity indices of all alliance partner exchanges. Edemir Pinto, CEO of BM&F BOVESPA, explains: “These products would then be cross-listed and traded in local currencies. They will also allow investors to gain exposure to other emerging markets through a locally listed product.”
A third phase may include product development and cooperation in additional asset classes and services.
Madhu Kannan, CEO of BSE Ltd, says: “The BRICS exchanges alliance holds great promise, as it will create avenues for Indian investors to diversify and expand into other emerging markets. It will also provide unique opportunities to investors in other BRICS nations to participate and contribute in India’s growth. BSE will actively work towards bringing world-class products to India as well as developing new products for other BRICS markets.”
Investors worldwide and those whose homes are in the BRICS economies are increasingly interested in investing in high growth emerging economies. Most of the BRICS countries are predicted to have above-average economic growth. They are going through shifts in that there is rising consumer power generated by a growing middle classes in each, which will accelerate demand.