The year 2022 ended on a positive note at the Bourse Régionale des Valeurs Mobilières (BRVM). With the listing of Orange Côte d’Ivoire, the largest market capitalization on the day of its IPO since the creation of the market in Abidjan, the BRVM starts 2023 auspiciously. This is an opportunity to take a look at the African stock markets.
By Dounia Ben Mohamed
The Bourse Régionale des Valeurs Mobilières (BRVM) has admitted to its listing on December 30, 2022, Orange Côte d’Ivoire with a record capitalization on the day of its IPO of 1 431.23 billion FCFA (2.18 billion euros), since the creation of the BRVM. Indeed, after the early closing of its Public Offering (OPV) of shares for an amount of 140.982 billion FCFA, (213 million euros) launched on the Regional Financial Market of the UEMOA from December 5 to 19, 2022, Orange Côte d’Ivoire has entered the compartment of shares of the BRVM with 1,538.19 billion FCFA (2.32 billion euros). A price at the first fixing of 10,210 FCFA, (15.5 euros) bringing, at the opening, the market capitalization of the share market to 7,487.051 billion FCFA (11.33 million euros).
Listed under the symbol ORAC at the reference price of 9,500 FCFA (14.38 euros), the Orange Côte d’Ivoire share ended the trading day at 10,210 FCFA (15.45 euros), up 7.47%. This new IPO through the sale of part of its stakes in the capital of Orange Côte d’Ivoire, within the process of privatization of companies with public shareholding initiated by the State of Côte d’Ivoire several years ago has several objectives. These include, among others, promoting mass shareholding, enhancing the notoriety of Orange Côte d’Ivoire among the financial community and the general public and contributing to the development of the Regional Financial Market of the UEMOA. It is therefore a reward for the efforts undertaken for several years to increase the number of companies listed on the BRVM through voluntary admissions, exits of Private Equity Funds and privatizations.
« The BRVM is one of the few African stock markets to end the year 2022 in the green »
This will allow ending the year 2022 on a high note and starting 2023 under the best possible auspices. Created on December 18, 1996 in Cotonou, the Bourse Régionale des Valeurs Mobilières (BRVM), an integrated electronic stock exchange common to eight West African countries (Benin, Burkina Faso, Côte d’Ivoire, Guinea-Bissau, Mali, Niger, Senegal and Togo), seems to have found its cruising speed. In a context where IPOs are rare in Africa (only 5 in 2022), the BRVM, with the admission of Orange, has again increased the number of listed companies to 46. « The capitalization of the equity market has thus risen sharply, from FCFA 6,085.42 billion (EUR 9.211 billion) on December 31, 2021 to FCFA 7,560.18 billion (EUR 11.44 billion) on December 30, 2022, representing a variation of 24.23%. The bond market has also improved, ending the year 2022 with a capitalization of 8 926.9 billion CFA francs, (13.51 billion euros), up 23.18% compared to 2021, » the institution said in a statement. « The market liquidity has also improved over the past year with a total volume of 255 220 696 securities traded in 2022, an increase of 3.02%. The values traded amounted to 469.64 billion CFA francs (710.86 million euros) in all compartments combined. It added: « The BRVM is, also, one of the few African stock markets to end the year 2022 in the green, the BRVM Composite index having posted 0.46% compared to its level of December 31, 2021 and the BRVM10 was at 7.86%. »
Casablanca in the red, East Africa makes progress, South Africa remains at the top
In fact, this is not the case for all. The Casablanca Stock Exchange in particular is ending and starting the year in the red. Though, it closed in the green last week, its main index, the MASI, increasing by 0.71% to 10. 111.81 points (pts) and the Morocco Stock Index (MSI 20), an index of the 20 most liquid stocks, as well as the Casablanca ESG 10, a thematic index that calculates the performance of socially responsible companies, rose by 0.87% to 809.68 pts and 1.18% to 768.19 pts, respectively, it recorded the largest declines individually. These were posted by Fenie Brossette (-4.13% to 115.05 DH), AtlantaSanad (-3.06% to 111 DH), Disty Technologies (-2.68% to 183.45 DH, 16, 64 euros), Lesieur Cristal (-2.53% to 221.5 DH, 20.09 euros) and Mutandis Sca (-2.25% to 195.5 DH, 17.73 euros). The day before at the close, the MASI had fallen by 3.82%.
That said, the Casablanca Stock Exchange, despite a gloomy end of the year, remains dynamic and displays royal ambitions. It remains the second largest financial market on the continent, behind South Africa, but ahead of Nigeria and Egypt. It seeks, in particular, to multiply by 5 the number of listed companies to 350 by 2035, from 75 at present, according to the forecasts of the board chairman, Kamal Mokdad. Interviewed by Saudi media « Al-Sharq News », the latter admitted however that « the financial market in Morocco suffers from a low supply of available shares against a high demand », specifying that it has attracted three listings in the last 12 months, « despite the difficult economic situation ».
In East Africa, the Sub-Sahara Africa Top 30 Companies report, a quarterly market report by analysts at AfricanFinancials Group, said the Rwanda Stock Exchange (RSE) and the Dar es Salaam Stock Exchange (DSE) recorded returns of 7.2 percent and 9.1 percent, respectively, in the 12 months to June this year. Other African exchanges that performed well during the period included Nigeria, generated returns of 20.9%, Zambia (12.1%), Seychelles (5%) and Botswana (2.8%).
« New amendments will go a long way in providing a conducive and internationally competitive environment for capital raising”
These are good progresses in a context of crisis, but they are far from dethroning the continent’s leading financial center, held by the Johannesburg Stock Exchange. The Johannesburg Stock Exchange has recently undertaken to relax its listing conditions to attract more companies. For example, the free float requirement (the portion of capital that corresponds to the shares that can actually be traded on the stock market) was to be lowered from 20% to 10%, a threshold similar to those in force on British and European stock markets. Similarly, the JSE is to relax the rules on financial reporting by listed companies and the procedures for listing debt instruments « in order to align with international leading markets to ensure the attractiveness and competitiveness of SPACs to issuers and investors,” Andre Visser, Director of Issuer Regulation at the JSE said in a statement. He added that “the new amendments will go a long way in providing a conducive and internationally competitive environment for capital raising.”
Interconnection, a new deal
A challenge that falls to all African stock markets. And the trend is for pooling together. The African Securities Exchanges Association (ASEA), which brings together 25 stock markets on the continent, launched on the sidelines of the 25th annual conference of the Association of African Stock Exchanges on December 7, a platform for interconnection around the seven largest stock exchanges, the African Exchanges Linkage Project (AELP). The initiative was led by the African Union, and partly funded by the African Development Bank and the Korea-Africa Economic Cooperation Trust Fund. It aims to stimulate the volume of investment and the number of investors, particularly in the context of the establishment of the African Free Trade Area (AfCFTA). Indeed, while it represents less than 2% of the world’s stock market capitalization, the integration of African stock exchanges is still a key issue for the financing of African economies. Indeed, the continent remains the least economically integrated in the world, with a rate not exceeding 4%. The AfCFTA must change this. Provided that the appropriate tools are put in place. Among these are more solid… and connected African capital markets.
