“Money makes the world go round.” So goes the old adage. According to the McKinsey Quarterly, the Global Capital Market has neither been larger and diverse, nor has its power been greater to shape the wealth of nations. Today however, it is determining the countries that businessmen ogle at while setting up their business centres.You perhaps reckon the popularity that the NASDAQ which tops in international listings with thousands of blue chip listings has had for decades. The Wall Street has been the talk of every corporate leader eyeing the
With stock markets totalling eighteen in Africa, the pace has been quite slow. Notably, the global trends have been marked by a shift from debt (…and more debt) and bank deposits towards debt securities. Private debt securities are the largest component of global financial stock and the fastest growing. According to the McKinsey Quarterly, from 1993 to 2002, they accounted for nearly half of the overall growth in global financial assets. Africa’s capital markets have been left out of the global trends.
A grim reality however encompasses the African markets. According to a United Nations report, most African financial markets are still tiny and fledgling, the Johannesburg Stock Exchange (JSE) being an exception, for it accounts for over 80% of total value of the Sub-Saharan Africa in terms of market capitalization.
Some few African financial markets still continue to record astounding performances consequently landing on the global 10 in terms of returns. A continental business magazine recently ranked
Why are our markets staggering? Why is it that all reports such as the McKinsey Global Institute’s (MGI) report on global financial markets and the Morgan Stanley Research on emerging markets exclude
The size factor can be demonstrated by the national frenzy that characterized the Ken Gen Shares in
In addition, our markets have still not positioned themselves for international listings. This can be partly blamed on the political climate. Although democracy has had its grip in more countries than it was in the past, many are yet to reposition themselves for international entrants. Although Kenya enjoys a bigger advantage in terms of listings with around 46 companies listed, it still can’t take advantage of the regional untapped market in
With the exception of Egypt and
Another noticeable trend is the market integration. Though Africa still has a deficiency for this, it could go a long way in increasing corporate trust that will attract a great deal of investors and a plethora of knowledge. Due to its size, integrations can go a long way in shaping stock markets by creating greater market empires than can equally compare with the western giants. The JSE is already doing this. Greenhill, a business development manager is geared towards winning more businesses to the JSE after their fruitless efforts to create a Pan African Stock Exchange. This will be achieved by looking for companies within and out of
Recently, African Investor (AI), a continental magazine, developed an index that includes the largest companies in the continent. Evaluating seven companies in every country, the AI 40 Share Index picked the best performing companies in the continent, considering those with sufficient liquidity and market capitalization that can be of interest to investors. Such an index will go a long way in providing a guide on how investors can diversify their investment portfolio across the continent.