Capital Markets
From The Report: Cote d’Ivoire 2019
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After four years of high gains following the end of the political instability in Côte d’Ivoire, the Bourse Régionale des Valeurs Mobilières – headquar¬tered in the Ivorian commercial capital Abidjan – is experiencing challenges marked by a significant drop in indexes, reaching a six-year low in 2018. Increased competition for telecoms companies in Senegal and Burkina Faso, a crisis in the Ivorian banking sector and fears of political unrest do not seem to indicate a short-term recovery in prices. However, bright economic prospects for the UEMOA region and increasingly attractive price-to-earnings ratios present medium-term opportunities for investors. As the bourse’s visibility is increasing and more companies list, interest for the equity market will continue to grow. This chapter contains interviews with Felix Edoh Kossi Aménounvé, CEO, La Bourse; and Niamkey Isidore Tanoé, CEO, Atlantique Finance.

Articles from this Chapter

Overview

Bright prospects: The bourse has been able to weather the downward trend seen across the region, with a slight uptick late in the year
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After four years of high gains following the end of the political instability in Côte d’Ivoire, indexes at the Bourse Régionale des Valeurs Mobilières (BRVM) – headquartered in the Ivorian commercial capital Abidjan – were set for a third consecutive year of decline in 2018. If the situation is leaving many investors worried, market observers say that the bourse is going through a necessary period of readjustment. The big picture remains good. The last five years have seen a significant…

Interview

Greater accessibility: Felix Edoh Kossi Aménounvé, CEO, Bourse Régionale des Valeurs Mobilières (BRVM), on financing growth
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Interview :Felix Edoh Kossi Aménounvé How have banks and the regional stock market responded to the tightened capital requirements? FELIX EDOH KOSSI AMÉNOUNVÉ: A few years ago, the Central Bank of West African States (Banque Centrale des États de l’Afrique de l’Ouest, BCEAO) raised the minimum capital requirements of banks and financial institutions to CFA10bn (€15m) and CFA3bn (€4.5m), respectively. This decision was a prelude to the implementation, effective as of 2018, of…

Analysis

Strengthening governance: Smaller companies will have an alternative to funding, access to financial instruments and be able to leverage their publicity
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The much-anticipated third board of the Bourse Régionale des Valeurs Mobilières (BRVM) that is dedicated to small and medium-sized enterprises (SMEs) was launched in 2017. With this new compartment the aim is to provide smaller companies – which account for around 80% of the economic structure of the UEMOA – access to long-term financial instruments and help them diversify capital to expand and boost their growth. Financing At the launch of the board in December 2017 officials of the BRVM…

Interview

Funding progress: Niamkey Isidore Tanoé, CEO, Atlantique Finance, on the capital market’s role in fuelling the national economy
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Interview :Niamkey Isidore Tanoé In what ways can Côte d’Ivoire’s capital markets be made more attractive? NIAMKEY ISIDORE TANOÉ: Private equity financing can only be achieved through two channels: the Regional Securities Exchange (Bourse Régionale des Valeurs Mobilières, BRVM) and private investors. The third compartment of the BRVM is a step in the right direction, but it hasn’t gained as much popularity as hoped, as it attracts mainly larger small and medium-sized enterprises…

Analysis

Significant moves: Banks showed gains in 2017, but will be impacted by Basel measures as well as provisions that affect their margin levels
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The UEMOA banking system, which has experienced accelerated development over the last five years with average annual growth of 13% of the total sector balance sheet, has remained globally stable and profitable. Nonetheless, there are still pockets of vulnerability. Indeed, some banks are still undercapitalised and several small banks still do not have the mandatory minimum share capital of CFA10bn (€15m) as at end-2017. In addition, activity in the UEMOA zone has been strongly impacted by monetary tightening and a fall of the reserve requirement ratio from 5% to 3%, somewhat allowing a quantitative easing. Since 2016 the central bank had doubled…

Analysis

Composite makeup: The exchange looks to overcome challenges it faced regarding new entrants, with a positive outlook moving forward
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Founded in 1998 the Bourse Régionale des Valeurs Mobilières (BRVM) is the stock exchange for the UEMOA zone. Initially composed of 35 companies listed on its equity sub-fund, the stock exchange grew to 45 companies at the end of 2017, 35 of which were Ivorian. In addition to this, the stock exchange boasted 37 bond lines. BRVM Performance In 2015 the BRVM was designated the best-performing African stock exchange with the BRVM Composite Index increasing by 17.7% that year. The MSCI Emerging Market Islamic Index nominated Côte d’Ivoire as a frontier market in Africa and the BRVM as the best Islamic stock exchange in sub-Saharan Africa following…

Analysis

UEMOA debt market: A snapshot of bond activity
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UEMOA member states’ budget execution in 2017 resulted in an aggravation of budget deficits in comparison to 2016, in conjunction with increases in investment and current expenditure. In this context the UEMOA states have resorted to sovereign debt emissions to cover their resource needs. The outstanding amount of their West African CFA franc securities represented 14.5% of GDP in 2017, mostly bonds, around 84.7% of the total emitted on local markets. The fundraising capacity offered by the regional market is to be put to its recent structural changes and the advent of new entities namely, UEMOA bonds – a regional agent for the promotion of…

Overview

Indexed growth: Inclusion in global indices often results in a greater flow of funds to capital markets, but it is just one aspect of the economic picture – Cote d’Ivoire
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The period of easily raising funds from abroad seems to be coming to an end for emerging markets around the world. In the new environment of higher interest rates in the US and increased competition for capital flows, portfolio managers are becoming more selective with where they place their money. One way for developing nations to ensure that their financial markets can continue to attract foreign funds and remain sustainably liquid is by being included in visible and well-regarded benchmark indices. In addition to drawing in fund managers, inclusion on such indices requires specific standards that indicate to investors that the participating…