|Activity at the NSE, Kenya|
THE NAIROBI SECURITIES EXCHANGE led five other African bourses to top the charts as world top performing securities exchanges, we can report. the best performing Analysts, among them, investing in Africa, www.investinginafrica.net show that by the year ending November 30th, 2012, African boasted of the six best performing bourses in terms of dollar dominated index.
The six are; Nairobi Stock exchange, Nigeria stock exchange, Zimbabwe industrials, Uganda securities exchange, BVRM, and Ghana stock Exchanges in that order.
The Nairobi securities exchange topped the pack posting 46.3 per cent return in dollar terms. Nairobi is capitalized at US$1.2 billion. The Nigeria Stock Exchange, capitalized at US$5.5 billion was second posting a 42 per cent return as at the end of November. The investing in Africa report is backed by reports from the bourses themselves. The Nigeria Stock Exchange shows that Market capitalization grew by 129 percent to US5.5 billion in November from US$4.23 billion in January. Index rose to 26,336.7 in November from 20,657 in January 2012.
The value of traded stocks at the Nairobi Stock Exchange rose 312 per cent from US42.2 million to US$130 million while volumes rose 261 per cent to 917 million at the end of November.
An index measures the change in value of a group of stocks over a defined period, usually, a year. Going by this measure, several bourses in Africa out performed bourses in the West. The S&P 500 posted a 12.6 per cent return.
Other good performers were Zimbabwe Industrials 28 per cent; Uganda Securities exchange 26per cent; BVRM 17.6 per cent and Ghana Stock exchange 16.7 per cent. Johannesburg Stock Exchange, the largest bourse in Africa posted 5.6 per cent return. The bourse became a victim of wild cat strikes in the mining sector. Some of the affected companies are listed at the JSE.
Ironically, at the opening of the year, the bourses were all in negative territory. The Nairobi securities exchange, the leading performer, was 33.30 per cent in the negative territory. And so was the Nigeria securities exchange, which was 26 per cent in the negative territory. Others in the negative territory included; the Uganda stock exchange (34.4 per cent), Zimbabwe industrial (9.32 per cent).
However, the turnaround began at the end of last year, though in tiny dosages. The Nairobi stock Exchange, in a monthly review of the markets performance, attributes to the change in fortunes a return of investors- both domestic and foreign into the bourse.
The African capital market was adversely affected by high oil prices in 2011 which led to increased inflationary pressures and weakened domestic currencies.
The melt down in Europe, also played a role: There was a stampede out of the African capital market in the second half of 2011 on fears of making loses by fund Managers. However, towards the end of the year, they began trickling back.
Data available shows that the foreign desk in the Nairobi Securities exchange is very active. By August 2012, says the Nairobi Securities exchange. Foreign investors hit 48.9 per cent of all investors in the bourse.
The good performance by African bourses, analysts say, is a result of political and economic reforms, favorable external environment, strong Commodity prices, relatively low interest rates, strong earnings by listed companies and attractive valuations of some scripts
The second reason: economic growth. Over the past decade six of the world’s ten fastest-growing countries were African, says the Economist. “In eight of the past ten years, Africa has grown faster than East Asia, including
growth has added another 60 million to Africa’s
middle class whose per capita is $3,000. This number is expected to rise to 100
million in 2015, says the Economist.
This has increased local consumption making local manufacturers and other listed
firms profitable and attractive to investors.