Interview: Edoh Kossi Amenounve
To what extent has the BRVM been affected by instability in Côte d’Ivoire and in global markets?
EDOH KOSSI AMENOUNVE: Since we began in 1998, we have seen steady growth, with 40 companies currently listed. In spite of the international financial slowdown and Côte d’Ivoire’s political crisis, the BRVM has seen a strong recovery over the past two years. Turnover from 2011 to 2012 doubled from the lows during the crisis.
And in 2012, for example, the BRVM 10 Index, which measures the 10 most active stocks on the exchange, grew by just over 16.12%, ending the year at 184.04 points. The Composite All Share Index grew even faster, increasing by nearly 19.95% by the end of 2012, when the bourse’s market capitalisation hit a record high of more than CFA4.03trn (€6.05bn), an increase year-on-year (y-o-y) of 26.89%.
Growth has not stopped. The recovery has been continuing throughout 2013, particularly given the strong headline GDP performance of the BRVM’s member countries. Côte d’Ivoire, for example, is looking at a growth rate of approximately 8% for 2013, which is being reflected by a greater magnitude in the performance of the equity markets, which by the end of the first half of 2013 had jumped by 26.61% compared to the end of 2012 and allowed the exchange to touch a new historic record for market capitalisation of CFA5.39trn (€8.09bn). It is even more impressive if you take a look at specific stocks, some of which saw growth of more than 30%. In the first semester of 2013, prices of 12 securities increased by over 30%, seven of which grew by between 50% and 270%. As such, there are attractive price-to-earning ratios, even in comparison with other emerging markets.
How can this growth be sustained?
AMENOUNVE: We have a number of objectives that we are working to achieve to increase activity, capitalisation and listings. The focus for the moment is on improving the bourse’s attractiveness, strengthening its transparency and governance, and boosting the role it plays in funding the region’s broader growth. There are a number of more specific targets, including encouraging more small and medium-sized enterprise (SME) listings, overhauling the exchange’s technological platforms and trading systems, increasing its visibility and expanding the number of retail investors.
We have seen interest from banks in the region to list on the exchange and a number of other listed firms are looking at increasing their capital on the market. Of course we are looking at improving communication towards prospective companies on the benefits of a listing, as there is a general lack of awareness. We are also discussing potential reductions in listing fees and providing additional incentives with the approval of the government for companies who are hoping to list.
We are hoping to accelerate reforms. Some of the measures we are implementing include a continuous six-hour trading day – up from two hours and the fixing mechanism in place previously – as well as exploring the possibility of the setting up of a third board dedicated to SMEs, as we have seen in other countries like Nigeria. Bringing in retail investors could also be done through splitting stocks to make some shares more accessible and available. We have already seen the impact on Sonatel’s shares in 2012, when they did a 10:1 stock split. Not many companies have done this but we are encouraging it.
Is there scope for encouraging dual-listings or cross-listings with other exchanges in the region?
AMENOUNVE: In the long term we are hoping to work alongside the Ghana Stock Exchange and the Nigeria Stock Exchange to encourage greater cooperation and integration between each of the markets. We plan to actively pursue this project over the years to come, and the benefits from doing so will be enormous, particularly given the large number of companies that are active in multiple parts of the region. Pursuing this approach will provide these regional companies with an easier route to access local sources of funding.
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