Bien qu’ils ne soient pas le seul facteur à considérer lors d’un investissement, comprendre comment fonctionnent les dividendes peut vous aider à prendre des décisions plus éclairées.
Dans le monde de l’investissement, les dividendes sont souvent vantés comme un avantage clé de la possession d’actions. Que vous soyez un investisseur chevronné ou que vous débutiez, comprendre les dividendes est crucial pour bâtir une stratégie d’investissement globale.
Mais qu’est-ce qu’un dividende et comment fonctionne-t-il ?
Dans cet article, nous répondons à cette question et bien plus encore ; en plongeant dans le monde des dividendes, en explorant leur mécanique, leurs avantages et leurs inconvénients potentiels pour offrir des informations qui peuvent vous aider à prendre des décisions d’investissement plus éclairées.
Qu’est-ce qu’un Dividende ?
En son cœur, un dividende est une distribution d’une partie des bénéfices d’une entreprise à ses actionnaires.
Lorsqu’une entreprise génère des bénéfices, elle a plusieurs options pour utiliser cet argent. Elle peut réinvestir dans l’entreprise, rembourser des dettes, racheter des actions ou distribuer une partie des bénéfices aux actionnaires sous forme de dividendes.
Les dividendes sont généralement versés régulièrement, souvent trimestriellement, bien que certaines entreprises optent pour des distributions annuelles ou semi-annuelles.
Comment Fonctionnent les Dividendes ?
Pour comprendre comment fonctionnent les dividendes, décomposons le processus :
Date de Déclaration : Le conseil d’administration de l’entreprise annonce le dividende, y compris le montant par action et la date de paiement.
Date Ex-Dividende : C’est la date limite pour être éligible au dividende. Si vous achetez l’action à cette date ou après, vous ne recevrez pas le dividende à venir.
Date de Détention : L’entreprise vérifie ses registres pour identifier les actionnaires enregistrés qui recevront le dividende.
Date de Paiement : C’est le moment où le dividende est effectivement payé aux actionnaires.
Par exemple, considérons un scénario hypothétique avec une entreprise cotée à la bourse BRVM. Sonatel Sénégal (SNTS) annonce un dividende de 1,50 XOF par action. Si vous possédez 1 000 actions, vous recevrez 1 500 XOF en dividendes lorsqu’ils seront versés.
Types de Dividendes
Dividendes en Espèces : Le type le plus courant, où les actionnaires reçoivent un paiement en espèces.
Dividendes en Actions : Au lieu de liquidités, l’entreprise distribue des actions supplémentaires à ses actionnaires.
Dividendes en Nature : Rarement, une entreprise peut distribuer des actifs physiques aux actionnaires.
Dividendes Spéciaux : Paiements uniques, souvent lorsque l’entreprise dispose de liquidités excédentaires suite à une période particulièrement profitable ou à une vente d’actifs.
Rendement du Dividende
Le rendement du dividende est une métrique clé pour les investisseurs axés sur les revenus. Il se calcule en divisant le dividende annuel par action par le prix actuel de l’action. Par exemple, si une action cotée à 100 XOF verse un dividende annuel de 5 XOF, son rendement en dividendes serait de 5 %.
Sur les marchés africains, certaines entreprises offrent des rendements de dividendes attrayants. Par exemple, en 2023, Safaricom Plc, cotée à la Nairobi Securities Exchange, a historiquement offert un rendement de dividende compétitif, ce qui en fait une option intéressante pour les investisseurs cherchant des revenus.
Ratio de Distribution des Dividendes
Ce ratio montre le pourcentage des bénéfices d’une entreprise versés sous forme de dividendes.
Un ratio de distribution inférieur pourrait indiquer qu’une entreprise réinvestit davantage dans sa croissance, tandis qu’un ratio plus élevé pourrait suggérer une entreprise plus mature axée sur le retour de valeur aux actionnaires.
Par exemple, une entreprise comme Guaranty Trust Bank au Nigeria a maintenu une approche équilibrée, offrant des dividendes tout en réinvestissant dans ses opérations pour alimenter la croissance.
Les Avantages des Dividendes
Revenu Régulier : Les dividendes peuvent fournir un flux de revenus régulier, particulièrement attractif pour les retraités ou ceux recherchant des revenus passifs.
Croissance Composée : Réinvestir les dividendes peut significativement augmenter les rendements à long terme grâce à la puissance des intérêts composés.
Signe de Santé Financière : Des paiements de dividendes réguliers peuvent être un indicateur de la stabilité financière et de la rentabilité d’une entreprise.
Réduction de la Volatilité du Portefeuille : Les actions versant des dividendes peuvent aider à stabiliser un portefeuille, car elles représentent souvent des entreprises plus établies.
Avantages Fiscaux : Dans certaines juridictions, les dividendes peuvent être taxés à un taux inférieur par rapport à d’autres formes de revenus.
Inconvénients Potentiels
Fiscalité : Les dividendes sont souvent imposables, ce qui peut impacter les rendements nets.
Coût d’Opportunité : L’argent versé sous forme de dividendes n’est pas réinvesti dans la croissance de l’entreprise.
Non Garanties : Les entreprises peuvent réduire ou éliminer les dividendes si les conditions financières se détériorent.
Peut Indiquer une Croissance Limitée : Des distributions de dividendes élevées pourraient suggérer qu’une entreprise a des opportunités d’investissement limitées.
Les Dividendes sur les Marchés Africains
Les marchés boursiers africains offrent des opportunités de dividendes intéressantes. De nombreuses entreprises établies dans des secteurs comme les télécommunications, les banques et les biens de consommation ont des antécédents de paiements de dividendes réguliers.
Par exemple, sur la BRVM, des entreprises comme Orange CI (ORAC) et Société Ivoirienne de Banque (SIBC) paient régulièrement des dividendes. Au Kenya, des entreprises comme Safaricom et East African Breweries maintiennent des politiques de dividendes attractives pour les investisseurs axés sur les revenus.
Il est important de noter que les politiques de dividendes peuvent varier considérablement entre différents marchés africains. Alors que certains marchés, comme l’Afrique du Sud, ont des cultures de dividendes plus établies, d’autres sont encore en développement. Cette diversité offre aux investisseurs la possibilité d’adapter leurs stratégies à différentes dynamiques de marché.
Stratégies pour Investir dans les Dividendes
Investissement en Croissance de Dividendes : Concentrez-vous sur les entreprises ayant un historique de croissance constante de leurs dividendes au fil du temps.
Investissement à Haut Rendement : Ciblez les actions avec des rendements de dividendes supérieurs à la moyenne, mais soyez prudent avec les rendements qui semblent trop beaux pour être vrais.
Plans de Réinvestissement des Dividendes (DRIPs) : De nombreuses entreprises offrent des plans où les dividendes sont automatiquement réinvestis pour acheter plus d’actions, accélérant ainsi la croissance composée.
Diversification : Répartissez les investissements sur différents secteurs et régions géographiques pour atténuer les risques.
Recherche sur les Ratios de Distribution : Recherchez des entreprises avec des ratios de distribution durables, généralement inférieurs à 60 % pour la plupart des industries.
Implications Fiscales : Comprenez le traitement fiscal des dividendes dans votre juridiction. Certains pays offrent des taux d’imposition préférentiels sur les revenus de dividendes.
Risque de Change : Lorsqu’on investit sur des marchés étrangers, soyez conscient de l’impact des fluctuations monétaires sur vos rendements de dividendes.
Cycles Économiques : Les paiements de dividendes peuvent être affectés par les récessions économiques, alors considérez le contexte économique plus large.
Fondamentaux de l’Entreprise : Ne poursuivez pas des rendements élevés sans considérer la santé financière globale de l’entreprise et ses perspectives de croissance.
Environnement Réglementaire : Restez informé des réglementations dans différents marchés qui pourraient affecter les politiques de dividendes ou le rapatriement des fonds.
Obtenez Votre Stratégie d’Investissement en Dividendes Correcte
Les dividendes peuvent jouer un rôle crucial dans une stratégie d’investissement, offrant un mélange de revenus réguliers et un potentiel de croissance à long terme.
Bien qu’ils ne soient pas le seul facteur à considérer lors d’un investissement, comprendre comment fonctionnent les dividendes peut vous aider à prendre des décisions plus éclairées et à mieux aligner vos investissements avec vos objectifs financiers.
Les marchés africains présentent des opportunités uniques pour l’investissement en dividendes, avec de nombreuses entreprises établies offrant des rendements attrayants.
Cependant, comme pour toute stratégie d’investissement, il est essentiel de faire des recherches approfondies et de considérer votre situation financière individuelle et vos objectifs.
Chez Daba, nous aidons les investisseurs à naviguer dans les complexités des marchés africains, y compris les actions versant des dividendes. Notre plateforme offre un accès à un large éventail d’opportunités d’investissement à travers le continent, soutenu par des recherches et des analyses approfondies.
Que vous cherchiez à construire un portefeuille axé sur les dividendes ou simplement à incorporer quelques actions versant des dividendes dans votre stratégie existante, Daba offre les outils et les informations nécessaires pour prendre des décisions éclairées.
Rappelez-vous, bien que les dividendes puissent être une caractéristique attrayante de la possession d’actions, ils doivent être considérés dans le cadre d’une stratégie d’investissement plus large. Considérez toujours des facteurs comme les fondamentaux de l’entreprise, les conditions du marché et votre tolérance au risque personnelle lors de la prise de décisions d’investissement.
While they’re not the only factor to consider when investing, understanding how dividends work can help you make more informed decisions.
In the world of investing, dividends are often touted as a key benefit of stock ownership. Whether you’re a seasoned investor or just starting out, understanding dividends is crucial for building a comprehensive investment strategy.
But what exactly are dividends, and how do they work?
In this article, we provide an answer to that question and more; diving into the world of dividends, exploring their mechanics, benefits, and potential drawbacks to offer insights that can help you make more informed investment decisions.
What Are Dividends?
At its core, a dividend is a distribution of a portion of a company’s earnings to its shareholders.
When a company generates profits, it has several options for using that money. It can reinvest in the business, pay off debt, buy back shares, or distribute some of the profits to shareholders in the form of dividends.
Dividends are typically paid out regularly, often quarterly, although some companies opt for annual or semi-annual distributions.
How Do Dividends Work?
To understand how dividends work, let’s break down the process:
Declaration Date: The company’s board of directors announces the dividend, including the amount per share and the payment date.
Ex-Dividend Date: This is the cut-off date for dividend eligibility. If you buy the stock on or after this date, you won’t receive the upcoming dividend.
Record Date: The company checks its records to identify shareholders of record who will receive the dividend.
Payment Date: This is when the dividend is actually paid to shareholders.
For example, let’s consider a hypothetical scenario with a company listed on the BRVM stock exchange.
Sonatel Senegal (SNTS) announces a dividend of 1.50 XOF per share. If you own 1,000 shares, you would receive 1,500 XOF in dividends when they’re paid out.
Types of Dividends
Cash Dividends: The most common type, where shareholders receive a cash payment.
Stock Dividends: Instead of cash, the company distributes additional shares to its shareholders.
Property Dividends: Rarely, a company might distribute physical assets to shareholders.
Special Dividends: One-time payouts, often when a company has excess cash from a particularly profitable period or asset sale.
Dividend Yield
The dividend yield is a key metric for income-focused investors. It’s calculated by dividing the annual dividend per share by the current stock price. For instance, if a stock trading at 100 XOF pays an annual dividend of 5 XOF, its dividend yield would be 5%.
In African markets, some companies offer attractive dividend yields. For example, as of 2023, Safaricom Plc, listed on the Nairobi Securities Exchange, has historically offered a competitive dividend yield, making it an interesting option for income-seeking investors.
Dividend Payout Ratio
This ratio shows what percentage of a company’s earnings are paid out as dividends.
A lower payout ratio might indicate that a company is reinvesting more in its growth, while a higher ratio could suggest a more mature company focused on returning value to shareholders.
For instance, a company like Guaranty Trust Bank in Nigeria has maintained a balanced approach, offering dividends while also reinvesting in its operations to fuel growth.
The Benefits of Dividends
Regular Income: Dividends can provide a steady stream of income, particularly attractive for retirees or those seeking passive income.
Compound Growth: Reinvesting dividends can significantly boost long-term returns through the power of compounding.
Sign of Financial Health: Regular dividend payments can be an indicator of a company’s financial stability and profitability.
Reduced Portfolio Volatility: Dividend-paying stocks can help stabilize a portfolio, as they often represent more established companies.
Tax Advantages: In some jurisdictions, dividends may be taxed at a lower rate than other forms of income.
Potential Drawbacks
Taxation: Dividends are often taxable, which can impact net returns.
Opportunity Cost: Money paid as dividends isn’t being reinvested in the company’s growth.
Not Guaranteed: Companies can reduce or eliminate dividends if financial conditions deteriorate.
May Indicate Limited Growth: High dividend payouts might suggest a company has limited investment opportunities.
Dividends in African Markets
African stock markets offer interesting dividend opportunities. Many established companies in sectors like telecommunications, banking, and consumer goods have histories of paying regular dividends.
For example, on the BRVM, companies like Orange CI (ORAC) and Societe Ivoirienne de Banque (SIBC) have consistently paid dividends. In Kenya, companies like Safaricom and East African Breweries have maintained dividend policies attractive to income-focused investors.
It’s worth noting that dividend policies can vary significantly across different African markets. While some markets, like South Africa, have more established dividend cultures, others are still developing. This diversity offers opportunities for investors to tailor their strategies to different market dynamics.
Strategies for Dividend Investing
Dividend Growth Investing: Focus on companies with a history of consistently increasing their dividends over time.
High-Yield Investing: Target stocks with above-average dividend yields, but be cautious of yields that seem too good to be true.
Dividend Reinvestment Plans (DRIPs): Many companies offer plans where dividends are automatically reinvested to purchase more shares, accelerating compound growth.
Diversification: Spread investments across different sectors and geographical regions to mitigate risk.
Research Payout Ratios: Look for companies with sustainable payout ratios, typically below 60% for most industries.
Tax Implications: Understand the tax treatment of dividends in your jurisdiction. Some countries offer preferential tax rates on dividend income.
Currency Risk: When investing in foreign markets, be aware of how currency fluctuations might impact your dividend returns.
Economic Cycles: Dividend payments can be affected by economic downturns, so consider the broader economic context.
Company Fundamentals: Don’t chase high yields without considering the company’s overall financial health and growth prospects.
Regulatory Environment: Stay informed about regulations in different markets that might affect dividend policies or repatriation of funds.
Getting Your Dividends Investing Strategy Right
Dividends can play a crucial role in an investment strategy, offering a blend of regular income and potential for long-term growth.
While they’re not the only factor to consider when investing, understanding how dividends work can help you make more informed decisions and better align your investments with your financial goals.
African markets present unique opportunities for dividend investing, with many established companies offering attractive yields.
However, as with any investment strategy, it’s essential to do thorough research and consider your individual financial situation and goals.
At Daba, we help investors navigate the complexities of African markets, including dividend-paying stocks. Our platform provides access to a wide range of investment opportunities across the continent, backed by in-depth research and analysis.
Whether you’re looking to build a dividend-focused portfolio or simply want to incorporate some dividend-paying stocks into your existing strategy, Daba offers the tools and insights you need to make informed decisions.
Remember, while dividends can be an attractive feature of stock ownership, they should be considered as part of a broader investment strategy. Always consider factors like company fundamentals, market conditions, and your personal risk tolerance when making investment decisions. Happy investing!
Les marchés boursiers africains ont connu une croissance robuste, offrant des opportunités lucratives aux investisseurs. Découvrez les dix plus grandes bourses du continent par capitalisation boursière en mai 2024.
Les marchés boursiers africains ont connu une croissance robuste, offrant des opportunités lucratives aux investisseurs. Avec 29 bourses opérationnelles et une capitalisation boursière combinée d’environ 1,3 trillion de dollars, les bourses africaines contribuent à plus de 2 % du marché mondial.
Aujourd’hui, les cinq plus grands marchés boursiers par capitalisation boursière sont la JSE d’Afrique du Sud, la bourse de Casablanca, la Bourse du Botswana, la Nigerian Exchange (NGX) et l’EGX. Aux côtés de ces géants, des bourses importantes se trouvent également dans des pays comme le Kenya et la Bourse Régionale des Valeurs Mobilières (BRVM), qui dessert huit pays francophones de l’Union Économique et Monétaire Ouest Africaine (UEMOA).
En explorant les dix plus grandes bourses par capitalisation boursière, découvrez comment Daba peut renforcer votre parcours d’investissement à travers les marchés dynamiques de l’Afrique. Basé sur les dernières données du 31 mai 2024, fournies par Daba Intelligence, voici les dix plus grandes bourses d’Afrique classées par capitalisation boursière en dollars américains :
La Bourse de Johannesburg, fondée en 1887, est la plus grande d’Afrique avec une capitalisation boursière de 1,07 trillion de dollars. Il y a environ 354 entreprises cotées, les plus importantes étant Naspers Limited, FirstRand Limited et Standard Bank Group.
La Bourse de Casablanca au Maroc, fondée en 1929, est la deuxième plus grande bourse d’Afrique avec une capitalisation boursière de 69,8 milliards de dollars. Les principales entreprises cotées incluent Attijariwafa Bank, Banque Centrale Populaire et Bank of Africa.
3. Bourse du Botswana (BSE) – 52 461 754 292,20 $
Avec une capitalisation boursière de 52,5 milliards de dollars, la Bourse du Botswana est la troisième plus grande d’Afrique. Les principales entreprises cotées incluent Anglo American Plc, First National Bank Botswana et Botswana Insurance Holdings.
Que vous soyez un investisseur institutionnel recherchant une exécution commerciale fiable ou un investisseur de détail cherchant à élargir vos horizons d’investissement, la plateforme conviviale de Daba garantit transparence et facilité d’utilisation. Téléchargez notre application maintenant pour commencer.
Dividendes élevés sur les Bourses Africaines : La clé pour optimiser votre portefeuille
4. Nigerian Exchange (NGX) – 41 029 161 524,02 $
La NGX du Nigeria a une capitalisation boursière de 41 milliards de dollars, ce qui en fait la quatrième plus grande bourse d’Afrique. Les principales entreprises cotées incluent Airtel Africa Plc, MTN Nigeria Communications, Dangote Cement et BUA Cement.
5. Bourse égyptienne (EGX) – 40 278 844 587,20 $
La Bourse égyptienne, formée par la fusion des bourses d’Alexandrie et du Caire, a une capitalisation boursière de 40,3 milliards de dollars. Les principales entreprises cotées incluent Abu Qir Fertilizers, Alexandria Containers and Goods et Commercial International Bank.
La BRVM, bourse régionale desservant huit nations ouest-africaines, a une capitalisation boursière de 13,8 milliards de dollars. Environ 56 entreprises sont cotées et les principales cotations incluent Sonatel, Orange Côte d’Ivoire et Ecobank Transnational Incorporated.
7. Bourse des valeurs mobilières de Nairobi (NSE) – 13 639 305 859,51 $
La Bourse des valeurs mobilières de Nairobi au Kenya a une capitalisation boursière de 13,6 milliards de dollars. Safaricom, Equity Group Holdings et East African Breweries Limited sont ses plus grandes entreprises cotées. Fondée en 1954, la NSE est la plus grande bourse d’Afrique de l’Est avec 65 entreprises cotées.
Investir sur les marchés dynamiques de l’Afrique n’a jamais été aussi facile. Les services d’investissement de Daba offrent des stratégies personnalisées pour vous aider à maximiser les rendements et à gérer les risques efficacement. Téléchargez notre application maintenant pour commencer.
8. Bourse de Maurice (SEM) – 7 429 084 934,02 $
La SEM a une capitalisation boursière de 7,4 milliards de dollars, avec les principales cotations incluant MCB Group, Ireland Blyth et SBM Holdings. Fondée en 1989, la Bourse de Maurice (SEM) couvre Maurice et est basée à Port Louis. 56 entreprises sont cotées sur le marché officiel de la SEM, tandis que 42 autres sont cotées sur le marché du développement et des entreprises (DEM).
9. Bourse de Dar es Salaam – 6 657 926 433,80 $
La Bourse de Dar es Salaam en Tanzanie a une capitalisation boursière de 6,7 milliards de dollars. Située à Dar es Salaam, la capitale commerciale et plus grande ville de Tanzanie, elle a été incorporée en septembre 1996 et les échanges ont commencé en avril 1998.
10. Bourse du Ghana (GSE) – 5 709 315 520,89 $
En dernière position des dix premières, on trouve la Bourse du Ghana avec une capitalisation boursière de 5,7 milliards de dollars. Ses principales entreprises cotées incluent Ecobank Transnational, AngloGold Ashanti Plc et Access Bank Ghana.
La croissance dynamique des bourses africaines souligne l’importance croissante du continent dans la finance mondiale. Daba s’engage à fournir des informations fiables, des services transparents et des expériences d’investissement fluides sur ces marchés.
Que vous cherchiez à diversifier votre portefeuille ou à explorer des opportunités émergentes, Daba se positionne comme votre partenaire de confiance pour naviguer dans le paysage dynamique des investissements en Afrique.
African stock markets have experienced robust growth, presenting lucrative opportunities for investors. Discover the ten largest stock exchanges on the continent by market cap as of May 2024.
African stock markets have experienced robust growth, presenting lucrative opportunities for investors. With 29 operational exchanges and a combined market capitalization of around $1.3 trillion, African bourses contribute over 2% to the global market.
Some of the oldest and most established exchanges in Africa include the Egyptian Exchange (EGX), founded in 1883, the Casablanca Stock Exchange of Morocco, tracing its roots back to 1929, the Johannesburg Stock Exchange (JSE) established in 1887, and the Nairobi Securities Exchange in Kenya, which dates back to 1954.
Today, the top five largest stock markets by market capitalization are South Africa’s JSE, the Casablanca bourse, the Botswana Stock Exchange, the Nigerian Exchange (NGX), and EGX. Alongside these titans, sizable exchanges can also be found in countries like Kenya and the West African Economic and Monetary Union (WAEMU) regional exchange serving eight French-speaking nations.
As we explore the ten largest stock exchanges by market capitalization, discover how Daba can empower your investment journey across Africa’s dynamic markets. Based on the latest data as of May 31, 2024, sourced by Daba Intelligence, here are the ten largest stock exchanges in Africa ranked by market capitalization in US dollars:
The Johannesburg Stock Exchange, founded in 1887, is the largest in Africa with a market capitalization of $1.07 trillion. There are around 354 listed companies, with the largest being Naspers Limited, FirstRand Limited, and Standard Bank Group.
The Casablanca Stock Exchange in Morocco, founded in 1929, is the second-largest stock market in Africa with a market cap of $69.8 billion. The top listed companies include Attijariwafa Bank, Banque Centrale Populaire, and Bank of Africa.
With a market capitalization of $52.5 billion, the Botswana Stock Exchange is the third-largest in Africa. Major listed companies include Anglo American Plc, First National Bank Botswana, and Botswana Insurance Holdings.
Whether you’re an institutional investor seeking reliable trade execution or a retail investor looking to expand your investment horizons, Daba’s user-friendly platform ensures transparency and ease of use. Download our app now to get started.
Tap to Read: How to optimize your investments in Africa with dividend yields
4. Nigerian Exchange (NGX) – $41,029,161,524.02
Nigeria’s NGX has a market cap of $41 billion, making it the fourth-largest stock exchange in Africa. Major listed companies include Airtel Africa Plc, MTN Nigeria Communications, Dangote Cement, and BUA Cement.
5. Egyptian Exchange (EGX) – $40,278,844,587.20
The Egyptian Exchange, formed by the merger of Alexandria and Cairo stock exchanges, has a market cap of $40.3 billion. Top listed firms include Abu Qir Fertilizers, Alexandria Containers and Goods, and Commercial International Bank.
Kenya’s Nairobi Securities Exchange has a market capitalization of $13.6 billion. Safaricom, Equity Group Holdings, and East African Breweries Limited are its biggest listed companies. Founded in 1954, the NSE is the largest stock market in East Africa with 65 listed companies.
Investing in Africa’s vibrant markets has never been easier. Daba’s investment services offer personalized strategies to help you maximize returns and manage risk effectively. Download our app now to get started.
8. Stock Exchange of Mauritius (SEM) – $7,429,084,934.02
The SEM has a market cap of $7.4 billion, with top listings including MCB Group, Ireland Blyth, and SBM Holdings. Founded in 1989, the Stock Exchange of Mauritius (SEM) covers Mauritius and is based in Port Louis. 56 companies are quoted on the SEM’s official market, while another 42 are quoted on the Development and Enterprise Market (DEM).
9. Dar es Salaam Stock Exchange – $6,657,926,433.80
Tanzania’s Dar es Salaam Stock Exchange has a market capitalization of $6.7 billion. Located in Dar es Salaam, the commercial capital and largest city in Tanzania, it was incorporated in September 1996 and trading started in April 1998.
Rounding out the top 10 is the Ghana Stock Exchange with a market cap of $5.7 billion. Its major listed companies include Ecobank Transnational, AngloGold Ashanti Plc, and Access Bank Ghana.
The dynamic growth of African stock exchanges underscores the continent’s increasing significance in global finance. Daba is committed to providing reliable information, transparent services, and seamless investment experiences across these markets.
Whether you are looking to diversify your portfolio or explore emerging opportunities, Daba stands as your trusted partner in navigating Africa’s vibrant investment landscape.
Invest with Daba to leverage the potential of Africa’s leading stock markets and drive your financial growth. Download the app to get started today!
Contributed by Chipo Muwowo, Founder of Capital Markets Africa.
SA small-cap Industrials enjoy strong earnings potential
Some firms have completed judicious acquisitions in recent years
Stock prices remain attractive despite significant increases in their value
African equity markets offer investors great promise. This is even though most African listed companies don’t appear on leading, global frontier and emerging market indices.
On the Johannesburg Stock Exchange (JSE), Africa’s largest and most liquid stock exchange, one sector that deserves more attention from investors is the small-cap industrials sector.
In this short piece, we highlight three stocks that could provide investors with a route into South African equities, perhaps for the first time.
Why?
SA industrials enjoy strong earnings potential driven by diversification and good asset management. Some firms have completed judicious acquisitions at home and abroad in recent years, and stock prices remain attractive despite significant increases in their value.
Afrimat Limited (JSE: AFT)
Afrimat is a mining and materials company listed on the Johannesburg Stock Exchange.
The company supplies a broad range of products: construction materials such as aggregates, bricks, and ready mix concrete; industrial minerals such as lime and lime products; bulk commodities such as iron ore and anthracite; future materials & metals such as phosphate, vermiculite, rare earth,s and green construction materials.
In addition, Afrimat Mining Services offers full pit-to-port solutions to the mining, construction, and quarry industries throughout Southern Africa.
Last year, the company generated revenues of ZAR2.8 billion (about $150 million), and operating profit was up 18.8%. CAGR Diluted EPS for the previous five years is up 21.47%.
Last month, Afrimat had its bid to acquire the South African operations of Lafarge, the global cement manufacturer, approved by the Competition Tribunal.
Afrimat CEO Andries van Heerden said of the deal, “It will increase [our] offering in the construction materials space, by expanding the Group’s quarry and ready-mix operations nationally. Additionally, access to the fly ash operations provides a foothold into the cement extender market. The grinding plant will allow Afrimat to grind various materials as value-added products for our current and new customers. In contrast, the cement kilns allow the Group to enter the cement value chain competitively.”
Hudaco Industries Limited (JSE: HDC)
Hudaco specializes in the importation and distribution of a broad range of high-quality, branded automotive, industrial, and electronic consumable products (mainly on an exclusive basis) for the South African and wider Southern African region.
It primarily supplies the consumer markets with stand-by and solar batteries, cooking and heating products, automotive spares and accessories, and more. Under engineering consumables, it supplies diesel engines, hydraulic and pneumatic equipment, electrical cable accessories, and more.
Over the years, the firm has been acquisitive. Last year, it bought the businesses of Brigit Fire (“to invest in an industry with growth potential and to further diversify the revenue stream”) as well as Plasti-Weld (“as a bolt-on acquisition for Astore Keymak, our thermoplastic pipes and fittings business”).
Last year, the company generated revenues of ZAR2.46 billion (about $132 million), and operating profit was up 23%. CAGR Diluted EPS for the previous five years is up 26.27%.
This was despite significant macroeconomic challenges – “chaos at South African ports impacting the supply chain, the impact of unprecedented levels of load-shedding, and rand volatility and weakness increasing cost of inventory,” its annual report noted.
Argent Industrial Limited (JSE: ART)
The group sells and trades manufactured steel and steel-related products such as metal gates, railings, and shutters. It owns over 20 vertically integrated subsidiaries in South Africa, the UK, and the US while it sends exports to over 35 countries globally. The Argent group of companies also includes several jet refueling and fuel storage businesses.
In 2021, it acquired South Africa-based American Shutters, a supplier of “a stylish door and window shutter security system” for ZAR57 million. A year earlier, it acquired UK-based Partington Engineering, a supplier of bespoke trolleys for both the traditional and e-commerce retail sectors, for GBP3.1 million.
Last year, the company generated revenues of ZAR2.46 billion (about $132 million), and operating profit was up 23%. CAGR Diluted EPS for the previous five years is up 26.27%.
In a note to investors last year, Rudi van Niekerk of fund manager Desert Lion Capital said, “I strongly believe that the market has been wrong on this one for a while now. Argent is not a hot AI stock. Maybe that is one of the reasons it is ignored by the market. Yet, as a real-world- economy stock, Argent’s earnings growth would make many a tech stock blush.”
High Dividend Yields on African Stock Exchanges: The Key to Optimizing Your Investment Portfolio in Africa
Investors are always looking for ways to optimize their portfolios and maximize their returns. One of the most effective techniques is to leverage dividend yields, especially on African stock exchanges. In this article, we will explore this portfolio optimization strategy, examining its advantages, potential risks, and how the Daba investment platform can help you implement this technique. Let’s dive into how to optimize your investments in Africa with dividend yields
What is Portfolio Optimization through Dividends?
Portfolio optimization through dividends involves investing in stocks of companies that regularly pay high dividends. The dividend yield is the ratio of the annual dividend per share to the stock price. The higher the yield, the more passive income the investor receives.
Benefits of this Strategy
Generation of Passive Income: Dividends provide a regular cash flow, allowing investors to benefit from passive income in addition to potential capital gains.
Stability: Companies that regularly pay dividends are often well-established and financially stable, offering some security to investors.
Protection Against Market Volatility: High-dividend stocks can help mitigate the effects of market volatility, with dividend income offsetting potential stock price declines.
Potential Risks
Dividend Reduction or Suspension: Companies may decide to reduce or suspend their dividend payments based on their financial performance or strategy.
Lack of Growth: Companies paying high dividends may have fewer resources to devote to growth, limiting their potential for stock price appreciation.
High Stock Prices: Companies that regularly pay high dividends may see their stock prices increase rapidly, which can alter the yield for investors who buy these stocks at higher prices.
Example on the BRVM
Let’s take the example of BOA Benin, listed on the Regional Stock Exchange (BRVM). In May 2024, BOA Benin is expected to pay a dividend of 706 FCFA per share, representing a dividend yield of 10.17%. By investing in this stock before the ex-dividend date (23/05/2024), you can benefit from this attractive yield and optimize your portfolio.
How Daba Can Help You
The Daba investment platform simplifies access to investment opportunities on African stock exchanges, including the BRVM. With Daba, you can easily research and invest in high-dividend stocks while benefiting from tools and resources to make informed decisions.
To learn more about investing in the stock market on Daba, visit the Daba platform at https://daba.finance/app.
We invite you to consult our comprehensive guide on investing in the stock market on Daba, available here.
Conclusion
Portfolio optimization through dividends is a powerful strategy for investors seeking to generate passive income and potentially mitigate risks on African stock exchanges. By using the Daba platform, you can take advantage of this technique and access attractive investment opportunities. Start optimizing your portfolio now and build a stronger financial future on the African continent.
Contributed by Kyle Schutter, a Partner at Grant & Co.
To go public, or not…
I attended the Ibuka accelerator, a program to help get private companies listed, kickoff event in October at the Nairobi Securities Exchange.
The Kenyan stock exchange, being the largest in the region, is worth a close look.
The requirements for listing in Nairobi are minimal and it is not nearly as hard to list as people make it out to be. A company needs only 1 year of track record, doesn’t need to be profitable, only needs to list 15% of its shares, only needs a capitalization of about $100,000, and only needs to have 25 shareholders within a few months of listing.
So why aren’t more companies doing it?
The Lagos, Johannesburg, Mauritius, and Nairobi stock exchanges are the most promising places to go public in Africa. We will focus on the Nairobi Securities Exchange as a case study to enable us to deep dive.
Note: nothing here should be construed as an insult to Africa, Kenya, or the Nairobi Securities Exchange. I love Kenya and hope to work together to find solutions that keep increasing investment in and wealth of Africa.
Brand Problem
Listing is only one part of the problem; you must have someone buy your shares. Is there a market that wants to buy shares in these particular companies?
Kenyan equities (stocks) have not performed well, underperforming against bonds land, and even savings accounts. This isn’t a recent phenomenon, although the current economic downturn has worsened it. It has been going down for 8 years.
The NSE 20 index is down from 6,000 in 2015 to 1,400 in 2023.
Why take more risk with equities and get a lower return?
So, the brand name of Equities in Kenya and Africa is generally not good. What factors lead to this, and how can it be fixed?
Remember, Investing is a Keynesian Beauty Contest: the goal is not to pick the most beautiful investment but to pick the one that others think is the best. If Kenyan Equities have a bad brand and investors don’t think others will pick them, then no one will pick them, and they will go down.
Too hard to list… or too easy?
The requirements of the NSE (Nairobi Securities Exchange) are very entrepreneur-friendly, probably too friendly. There are two ways exchanges should maintain quality: ethics and financial performance. The NSE could improve on both accounts.
Ethics: the NSE has frozen the shares of Mumias and Kenya Airways, which prevents shareholders from liquidating their shares and props up the companies so they can keep operating rather than declare bankruptcy.
Financial Performance: Other stock exchanges delist companies if their share price or market capitalization falls too low. The electric scooter startup, Bird, once valued at $3.2b has now been delisted from NYSE because it failed to maintain the $15m market cap minimum threshold and has since gone bankrupt. Stocks that fall below $1.00 per share on the NYSE are also delisted. NSE could also set a minimum price to encourage management to improve performance or face the consequences of being delisted.
A leadership problem?
The Ibuka event had an enthusiastic vibe but maintained certain unfortunate* African stereotypes: the event started 1 hour late, and the presentation contained a major data inaccuracy. Timeliness and data integrity must be core to the culture of a stock exchange. *I likely maintained certain American stereotypes at the event: incessant, obnoxious questions. C’est le vie.
This suggests room for improvement in the NSE company culture and, consequently, for leadership improvement. According to publicly available information, the outgoing CEO of the NSE made Ksh31m (~$210,000), a 19% increase over the previous year, all while making only Ksh14m (~$100,000) for the exchange in profit, a drop of 90% from the previous year. This suggests a problem with his compensation package (and the compensation structuring at the NSE).
Overall, the NSE Equities market has been down since the NSE CEO was appointed 9 years ago, while the Kenyan economy has grown at ~5% a year. Having met him briefly, I had the impression the CEO of the NSE was more of a politician than a visionary who made things happen. Subsequent conversations with market players have not changed that impression.
A new CEO has been appointed as the current CEO has ended his two 4 year terms. Hopefully, new leadership will improve the company culture and results. But this 4-year term suggests more room for improvement: why not have the CEO’s tenure be based on performance? Stock exchanges like NYSE don’t have specific terms for their CEOs. But, perhaps the NSE is a quasi-parastatal. And with the “prestige” associated with running a public market there is a risk that new appointees will be based more on politics than competence and compensation will not be tied to results.
Furthermore, 8 years isn’t enough time to turn something around. A true visionary would want 15 good years to build something great. Imagine Steve Jobs had to leave Apple in 2005 before the iPhone came out. Or Elon had to leave before the Model S came out? The 2×4-year term could be disposed of.
The newly appointed CEO looks to be a strong choice. He is a lawyer/accountant and Partner from EY. We were hoping for an entrepreneur. Hopefully, he will be an entrepreneurial lawyer/accountant.
Capital flight?
Another explanation for poor NSE performance is that foreign investors are leaving the African stock markets, especially the Kenyan stock market.
However, the Ksh 125b loss due to foreign investors leaving is only part of why the NSE has lost Ksh 1.5 trillion in value since 2021. Capital flight explains less than 10% of the story.
Anti-Free Market behavior
Here are two examples:
The NSE has frozen the trading of Kenya Airlines and Mumias, both of which have substantial government ownership. Kenya Airlines shares have been frozen for 4 years, renewed annually each year with the explanation that Kenya Airways needed time to restructure. In 2022, Kenya Airways lost about $40m. In 2023, they lost about $150m. The more time they get to restructure, the worse it gets. Both companies should go bankrupt, and shareholders should be able to sell their shares. The exchange freezing shares makes investors nervous. By comparison, the NYSE only froze trading for 1 day, and that was when the World Trade Center buildings were attacked in 2001.
That the CEO of the CMA has attempted to put price floors on stock prices is concerning. “Capital Markets Authority (CMA) chief executive Wycliff Shamia told the Star that the move has been necessitated by the fact some of the companies have very strong fundamentals but the valuation is quite low.” Yes, this is how free markets work. The market decides what something is worth, not the government. The latter would be communism.
Preference for other investments
Investors would rather speculate on land because Kenya has no property tax. GoK should fairly tax other parts of the economy, like creating a 0.1 to 1% annual Property Tax on land so that people can’t just sit on their land and speculate without contributing to the economy. All other developed and emerging economies have an annual Property Tax; it’s time Kenya did the same. Property tax is generally recognized as the least bad tax for economic growth and yet Kenya doesn’t have it and isn’t even considering it. See here how property tax could be implemented in Kenya and make all parties happy. With the devolved county governments, this could more easily be accomplished than in the past.
The effect of no property tax is clear in the numbers: Kenyan real estate is 75x bigger than equities ($678b vs $9b); meanwhile, by comparison, US real estate is only 2x bigger than US equities ($96T vs $46T). The US equities market sources capital from around the world because people trust Uncle Sam to treat equities fairly, but people don’t (yet) trust Uncle Kamau to do the same. I think the lack of Property Tax is the nail in the coffin of the NSE, and without this reform, there can be no vibrant equities market. (Note: the only meaningful property tax that exists is the capital gains tax when a property is sold, and even then, people can easily underreport the sale price, which is much harder to do on a public equities market. Some counties like Nairobi charge property tax at around $5-30 per year, which is a joke. There is also a tax on Rental payments, but this is not a tax on the property but a tax on a business being done on the property, making matters worse by disincentivizing property development.)
Because Treasury Bonds are over 15%, investors put their money there rather than risk equities. Hopefully, after the Eurobond payment in June 2024, Treasury yields will reduce and more money will flow back to the equities market.
The opportunity
But there are reasons to be bullish on African stock markets. African markets, excluding South Africa, have a relatively small proportion of their GDP trading. There is room for the equities market to grow 10x to align with other markets like the US, South Africa, and India.
Further, Kenya is the region’s largest and most liquid market and could be a regional player—it is already one of the most liquid markets in Africa. By aggregating regional companies onto its exchange, NSE could grow another 10x. On top of that, GDP will compound to 63% growth over the next 10 years. This brings the total NSE market cap potential to ~630x growth over the next 10 years… if NSE can play its cards right. 630x growth would put the NSE in line with India, so it’s not impossible, as discussed below.
On top of that, Annual Turnover (trading of the shares) is relatively low compared to other markets at 4.7% on NSE, ~40x less trading than the US, adjusted for market cap.
There is room for more economic activity on African stock markets.
So where is this 630x growth going to come from?
Increase valuation. The P/E (price to earnings) ratio is only 4.9 on NSE, a sign that investors have low growth expectations. This is half its historical level and 1/4th the ~20 P/E seen on US exchanges, a 4x growth potential for NSE stocks. This is due to uncertainty, low expectations, and discounting for inflation.
More companies listing. About 1% of US companies are publicly listed compared to 0.001%ish (my guesstimate) of Kenyan companies. Realistically, 10x growth potential (as most Kenyan businesses are too small to go public).
NSE quality. If the NSE can improve quality that will improve investor confidence and 2-10x growth.
Virtuous Cycle. There are the compounding effects of a growing market, generating interest and crowding in more capital.
Encourage international investors on local trading platforms. Currently, American, Canadian, Singaporean, and other foreign investors are discouraged from investing through existing brokerage channels and online trading platforms as the regulations in those countries are too costly to manage given the small public market. But as the market grows and trading platforms enable more foreign investors you can imagine that as returns are becoming more predictable with lower returns in the West, some intrepid investors will take an interest in Africa. 2x opportunity
Distribution on international trading platforms. Like Robinhood, Charles Schwab, etc. 10x opportunity.
Cross-listing from other countries in East, Central, and Southern Africa. Theoretically, a 10x opportunity, but in reality, maybe a 2x. Already, some of this is happening. Bank of Kigali (Rwanda) and Umeme (Uganda) are listed in their own countries but cross-listed on NSE. Crosslisting is relatively easy. Evidence suggests that cross-listing increases company valuation, so the cost of cross-listing more than pays for itself. (Source: Peristiani, Federal Reserve Bank of New York, 2010) Old Mutual, for example, is cross-listed on 5 exchanges. A Kenyan equities lawyer confirmed this would be a workable strategy.
Behavioral nudges. There is no way for Kenyan trading apps to automatically reinvest dividends, while automatic reinvestment of dividends is possible in other markets like the US. This could boost share price by 5% per year. This would cut out stock brokers and their fees. My little research online suggests the CMA (Capital Markets Authority) currently prevents automatic dividend reinvestment due to pressure from stock brokers.
Better trading UX. New trading apps that make it easy to buy shares can 2x capital yet again. I tried to sign up with 6 different trading apps and brokers. 3 didn’t allow Americans, Dutch, Singaporeans, or Canadians to trade. The others each had cumbersome documentation requirements: one required a scanned copy of a notarized copy of my passport. What’s the point of a copy of something notarized? The friction to buy shares as a foreigner or local is severe.
Reduced trading fees. This is the big one. CDSC and other government entities can reduce the tax on trading, which is currently at 0.36%. If a stock is only expected to gain 10% a year, paying 0.36% per trade precludes an efficient market that quickly buys and sells. For comparison, the NYSE has a fee on trades of $0.001 (which comes to 0.003% for a typical $30/share stock, 1/100th the price of Kenyan fees). Broker fees are also extremely high in Kenya at 1-1.5%, 10x higher than in the US at 0-0.1%. Reducing fees would not directly increase market cap, but a 10x reduction in fees might increase liquidity 10x, bringing the NSE more in line with other exchanges, from 4.7% turnover to perhaps 50% turnover. Increasing liquidity would perhaps increase the market cap by 2-10x by increasing P/E and crowding in more companies.
Improving taxation. Right now, US investors in Kenyan companies get taxed twice. Thus, going through Mauritius is advantageous.
Case study 1:
I tried to sign up for various trading apps (Exness, Sterling, AIB-AXYS, ABC). Finally, after a week I was able to sign up on EFG Hermes. I tried to trade using the Market Price but the Market Price was 2x the Limit Price. I was told by customer service to ignore the Market Price. Once I did make a trade it took two days for my trade to be reflected in the app. After many customer service requests, my trade was reflected but then the app showed I had a negative account balance. After another customer service call that has been fixed. Then my password stopped working.
I can see why there might not be a lot of retail investors in Kenyan securities as the buying experience does not inspire confidence. But it does show an opportunity for someone to build a better trading experience.
Why are companies resistant to going public?
Before we determine whether listing at all would benefit companies, let’s consider:
does going public preclude a company from raising additional institutional capital?
what are the tax implications?
what are the compliance costs?
with interest rates as they are, is now really the right time to list?
Treasuries are 15% in Kenya at the moment, so raising equity is a hard sell. But global interest rates are unlikely to stay high, so perhaps a reduction down to 10% in the coming years will be good for equities. Also, land prices, the other investment option, may run out of room to grow further as rural land prices in Kenya are already about the same as rural land prices in the US, channeling more investment to equities.
Compliance costs are Kenyan SMEs’ most commonly cited problem for not listing. However, the compliance costs in Kenya are typically only around $5,000 a month, which they should be doing even as a private company, like maintaining a board of directors and informing shareholders of material changes. Thus, this argument from SMEs doesn’t hold water.
In an IPO, a company would sell at least 15% of its shares to raise additional capital. Some companies might be concerned with how they can raise more capital after the IPO. Never fear! There are several options:
Corporate Bond: this is just a loan with a maturity. Of note, there is no collateral required for this. Also, it has a bullet payment at the end, which gives the company some breathing room on repayment.
Private placement: a select group of investors are invited to buy shares in the company. This can be done even before a public offering and provides more privacy for the company.
Rights Issue: this is where shares are offered to existing shareholders only so they are not diluted. This funding method is fairly common in Kenya, though not as common in the US.
Secondary Offering: just like a rights issue but open to anyone. This is common in the US. Tesla, for example, has had 8 Secondary Offerings since 2012.
All-stock acquisition: not strictly raising capital, but a public company can issue new shares to buy another company without spending cash. For example, Facebook’s acquisitions of WhatsApp and Instagram were mostly paid for in shares. Berkshire Hathaway makes its acquisitions this way, or through retained earnings (reinvested profits) rather than through Secondary Offerings.
Kenya has many advantages over other markets:
Recently, an app developed for retail investors called Dosikaa (I wrote the first review for it on the Play Store—it didn’t work for me) enables anyone to buy shares. Once Dosikaa works out the bugs, this greatly improves the share-buying UX, instead of going to a broker and signing a paper.
Kenya doesn’t limit foreign ownership in most companies (aside from banks and telcos) thus, international capital could invest in NSE-listed companies, while other African countries often have more restrictions on foreign ownership.
Increased liquidity and market capitalization compared to most other African exchanges.
There are also downsides:
registering a company in Kenya doesn’t have the same tax advantages as Mauritius
it doesn’t have nearly the same market depth as Johannesburg or other exchanges. Jumia, despite doing most of its business in Egypt, Kenya, and Nigeria, chose to list on the NYSE. JMIA once traded at $60/share but fell 20x. I bought some shares there at $2.5 last week. Let’s see if they can bounce back. Jumia raised more money on the NYSE than it could have on the NSE, but Jumia also might not have lost as much value if it had been listed in an African market. Local buyers in Kenya would have seen the value it creates by direct interaction on the ground. Thus, there are advantages to listing in Africa vs. New York.
One possible tax-efficient structure might be to register the holding company in Mauritius, list it in Mauritius, and then cross-list it to NSE (and other African exchanges) to increase liquidity.
Kenyan stocks have more government and founder ownership than the US; the US has more Retail, ESOP, and ETF (e.g. Index Fund) ownership than Kenya. (Source: CMA and TPC)
Case Study 2:
Flametree, listed on NSE GEMS (the growth board), has an equity value of around $10m, with sales growing about 25% a year. Flametree is a holding company that owns ~15 common spice, shampoo, and water tank brands in Kenya and other African countries. The CEO owns 84% of the company. The market cap is around $1.5m, the P/S is 0.05, P/B is 0.3–this would seem to be a very good buy. The CEO pays himself about $180,000 a year, which seems fair for a company of this size. But Flametree hasn’t paid dividends in years and the CEO has no incentive to. So the shares are kind of stuck in limbo, even as they are undervalued; since the CEO owns 84% there is no opportunity for a hostile takeover. The share price has declined about 90% since listing in 2014.
Case Study 3:
Equity Bank vs. KCB.
Equity Bank has a P/E of around 3.4 while KCB is around 1.8. Both seem undervalued. However, they have fairly different shareholdings. Largest investors:
Equity
– Arise BV (owned by Dutch and Norwegian Development finance institutions)
– James Mwangi (founder and CEO)
KCB
– Government of Kenya
– NSSF (social security)
Does ownership by a DFI and the founder help maintain the share price of Equity Bank?
I bought both Equity and KCB in December. Let’s see how they do.
Is a stock exchange ‘fit for purpose’ in Africa?
Just like mobile money in the US looks very different than mobile money in Africa (Venmo vs. Mpesa), perhaps funding large companies faces an analogous problem. Currently, African public markets are roughly a copy/paste of systems that work in the US. But the chances that a market with vastly less wealth, trust, and education would have the same optimal solution seems…small.
For example, NASDAQ was not even considered a stock market when Apple used it to sell its shares. It was considered an electronic over-the-counter (OTC) system typically reserved for the purgatory of penny stocks. But now it has risen to be the world’s second-largest exchange.
What would the African version of NASDAQ look like?
The EABX OTC system received regulatory approval on Feb 1, 2024. An OTC system for SACCO shares has also been created by Sacco Shares Exchange and SakoSoko.
MPesa was developed and funded by foreigners; Equity Bank, to this day, has a disproportionate amount of foreign shareholders.
What could a fit-for-purpose capital market look like? How can international Development Finance Institutions help?
Criticism of this article
Due to the nature of this article, many people have written comments to me directly rather than post them publicly. While the majority of comments were positive, I’ll focus on the critical ones here:
You are biased and you promote American Exceptionalism [that is, that Americans are somehow better than others.] NSE and the US stock market are not comparable in any way.
My goal is not to insult Kenya with this piece; I love Kenya and hope we can do better. I compared the NSE to the NYSE but could as easily have compared it to the Bombay Stock Exchange. NSE could serve all of Africa’s 1.4 billion people just like India’s stock exchanges serve 1.4 billion Indias. India is one country compared to 54 in Africa, but it is divided by religion, language, and culture just like Africa. BRSV exchange works across 7ish countries in West Africa so there’s no reason we can’t do the same in the east. The cross-listing seems like the low-hanging fruit where companies in Rwanda, Zambia, etc cross-list to NSE. We would see more of this if the NSE was more vivacious. So I’m not advocating that we should be like Americans but that there’s existing proof that it’s possible to be better.
You cherry-picked your data.
After asking for better data, none was shared.
CMA is doing a great job of reforming the public markets for the better.
When I requested examples, none were shared.
Macro trends
There is a trend globally for reduced public market listings. The number of IPOs in the US and UK has halved over the last 25 years.
This is reflected in Kenya where there have been no IPOs for a while, but in just the first half of 2023, there were 34 Private Equity deals worth $1.3b.
As the world becomes flatter, there is consolidation. Why list on the London Securities Exchange when you could list on Euronext or Nasdaq?
Therefore, there is a now or never, go big or go home for the NSE. If it doesn’t become a regional player it will be eclipsed by Mauritius, Johannesburg, Bombay, Euronext, or Nasdaq.
Go regional or become irrelevant.
Conclusion
Why don’t the public markets get fixed in Africa?
Fixing the capital markets starts with quality:
Rebrand the NSE as the African Stock Exchange and implement the below changes to become a regional player.
The most important and urgent problem is NSE leadership. The board is currently selecting a new CEO. A lot depends upon this choice. We need a visionary.
NSE (Nairobi Securities Exchange) can delist companies trading below $1m market cap, below Ksh 10 per share, or have less than 25% freely floating shares.
NSE can maintain a culture of timeliness and data quality.
CMA (Capital Markets Authority) can revoke stock broker licenses for trading apps with less than 99% uptime.
The government of Kenya can let the shilling float freely to eliminate the black market for currency and restore investor confidence.
GoK can fairly tax land which will drive more investment to productive parts of the economy like equities.
GoK can reduce interest rates on Treasury bonds. At 15% people would rather buy treasuries than take additional risk for the same (or even less) return on the stock exchange.
Reduce trading fees. CDSC, NSE, brokers, and government entities can reduce fees that currently preclude an efficient market and high turnover.
Let the free market do its job: Unfreeze listings like Mumias and Kenya Airways and the regulator, the CEO of CMA, could avoid saying things that sound communist.
Sell off parastatals and partially government-owned companies. The government of Kenya can sell KenGen and Safaricom to pay off its debt and let companies operate more efficiently on the public markets and in private hands.
Allow automatic dividend reinvestment: Public companies can create DRIPs (Dividend Reinvestment Programs) to increase demand for shares by automatically reinvesting dividends
Develop a built-for-Africa solution. Innovators and entrepreneurs can consider what an African-native solution to public markets might be that looks very different from the public markets we have in the West.
Together, these actions would instill confidence in investors and companies, local and foreign.
Improving the public markets could be a win for everyone. A big win that could 10x the economy. A win for investors, companies, stock brokers, the NSE, international development organizations, and the Kenyan government revenue collection.
En Afrique subsaharienne, il existe environ 29 bourses de valeurs réparties dans 38 pays, y compris deux bourses régionales, comme la Bourse Régionale des Valeurs Mobilières SA (BRVM). Cependant, ces bourses varient considérablement en taille et en activité de négociation.
Bien que certaines bourses notables, notamment la Bourse nigériane et la Bourse de Johannesburg, existent sur le continent, il existe également de nombreuses bourses plus petites avec des volumes de négociation limités et un petit nombre d’actions cotées.
Pour améliorer la performance de ces bourses, les pays travaillent activement à renforcer l’éducation et la confiance des investisseurs, à faciliter l’accès aux fonds et à établir des procédures transparentes et standardisées.
Comment investir dans les actions africaines
Il existe principalement deux façons d’investir dans les actions africaines : directement et par le biais de fonds, qu’il s’agisse d’ETF (fonds négociés en bourse) ou de fonds communs de placement.
Directement
Vous pouvez investir directement dans des actions africaines, mais cela comporte des risques supplémentaires. Les investisseurs particuliers en dehors du continent peuvent acheter des actions étrangères sous forme de reçus de dépôt sur des bourses, qui représentent des actions dans une entreprise étrangère.
Des applications mobiles telles que Daba font également leur apparition, permettant aux investisseurs étrangers du monde entier de rechercher des opportunités sur les marchés boursiers africains.
Avec une prise en charge de plusieurs pays, Daba fournit une plateforme fluide et conviviale pour les investisseurs internationaux afin d’explorer et d’investir sur les divers marchés boursiers africains tout en bénéficiant des avantages de données de marché en temps réel, d’analyses éclairantes et de fonctionnalités de trading intuitives.
Cependant, le trading d’actions internationales comporte des inconvénients. Les investisseurs peuvent rencontrer davantage de risques sur les marchés boursiers étrangers, et les titres étrangers sont souvent cotés dans une devise différente, ce qui entraîne un risque supplémentaire sous forme de pertes de change.
Fonds Fonds négociés en bourse
Pour les investisseurs particuliers, en particulier ceux basés en dehors du continent, qui souhaitent investir dans les économies d’Afrique subsaharienne, il est souvent plus judicieux d’investir par le biais d’un fonds commun de placement ou d’un fonds négocié en bourse (ETF). Ces fonds suivent un groupe diversifié d’entreprises opérant dans la région, plutôt que de s’appuyer sur des actions ou des entreprises individuelles.
Investir dans des ETF et des fonds communs de placement présente plusieurs avantages, tels que la facilité de négociation (certains sont négociés sur les bourses américaines), la diversification et la gestion professionnelle. Voici quelques options notables :
VanEck Africa Index ETF (AFK), qui suit les actions importantes et liquides en Afrique et détient environ 75 actions, avec les trois premières allocations par pays à l’Afrique du Sud, au Maroc et au Nigeria.
iShares South Africa Index Fund (EZA), qui investit principalement dans des entreprises sud-africaines de taille moyenne et grande dans les secteurs des services financiers, de la consommation discrétionnaire et des services de télécommunication.
Market Vectors Egypt Index Fund (EGPT), qui offre une exposition à l’Égypte, la troisième plus grande économie d’Afrique, avec une allocation d’environ 85 %. Le reste de l’allocation est réparti entre le Luxembourg, le Canada et l’Irlande pour la diversification géographique.
Fonds communs de placement
Les fonds communs de placement sont des véhicules d’investissement qui regroupent l’argent de plusieurs investisseurs pour investir dans une gamme diversifiée de titres. Ils peuvent se concentrer sur des secteurs économiques ou des régions spécifiques. Certains fonds se concentrent sur l’Afrique, tels que :
T. Rowe Price Africa and Middle East Fund (TRAMX), qui investit principalement dans des banques, des entreprises et quelques entreprises européennes opérant en Afrique, au Moyen-Orient et en Afrique du Sud.
Commonwealth Africa Fund (CAFRX), lancé en 2011, fait partie de la Commonwealth International Series Trust et investit principalement dans des actions et des titres de créance de sociétés manufacturières et minières africaines.
En conclusion, investir dans les marchés boursiers africains offre une opportunité prometteuse pour ceux qui cherchent à diversifier leurs portefeuilles d’investissement et à exploiter le potentiel économique croissant du continent.
Cependant, cela nécessite une recherche minutieuse, une planification stratégique et une perspective à long terme. Avec la bonne approche et un engagement à comprendre les dynamiques uniques de chaque marché, les investisseurs peuvent tirer parti des opportunités offertes par le paysage économique en évolution de l’Afrique et récolter potentiellement d’importantes récompenses.
Investing your hard-earned money can be daunting, especially with the multitude of options available in the financial market. However, one avenue that has consistently proven to be lucrative over the years is the stock market.
Stocks offer individuals the opportunity to become part-owners of companies and share in their profits.
We will explore what stocks are and why you should consider investing in them.
What are stocks?
Stocks, also known as shares or equities, represent ownership in a company.
When you buy stocks, you are essentially purchasing a small piece of that company, granting you a share of its assets and earnings.
How stocks work
Understanding how stocks work is vital for investors seeking to grow their wealth.
When an investor purchases shares of a company’s stock, they become a partial owner and gain the potential to benefit from the company’s growth and success.
As the company performs well, the value of its stock tends to increase, allowing investors to sell their shares at a higher price and earn a profit.
Let’s say an investor, John, decides to purchase 100 shares of ABC Company at a price of $10 per share. John believes that ABC Company has strong growth prospects due to its innovative products and increasing market demand.
After a few months, ABC Company announces positive earnings results, and the market responds favorably. As a result, the stock price of ABC Company rises to $15 per share. John decides to sell his 100 shares at this higher price. By selling his shares at $15 per share, John earns a profit of $500 ($15 – $10 = $5 profit per share × 100 shares).
This demonstrates how investors can benefit from the appreciation in stock prices but it’s important to note that stock prices can also decline, resulting in potential losses.
As a shareholder, you may benefit from both capital appreciation (an increase in the stock price) and dividends (a share of the company’s profits distributed to shareholders).
Stock prices are influenced by various factors, including the company’s financial performance, market conditions, industry trends, and overall economic outlook.
As an investor, you have to analyze these factors to make informed decisions about buying, holding, or selling stocks, either independently or with the help of an investment advisor.
image from Nairobi Stock Exchange
Investors can choose between different types of stocks, such as common stocks and preferred stocks. Common stocks provide voting rights and the opportunity to receive dividends, while preferred stocks offer a fixed dividend payment but typically do not carry voting rights.
Stocks are bought and sold on stock exchanges, such as the NYSE, NASDAQ, BRVM, NGX, JSE, etc. Investors can trade stocks through brokerage accounts, either by placing market orders (buying or selling at the prevailing market price) or limit orders (specifying a desired price range for buying or selling).
Investing in stocks carries risks, as stock prices can fluctuate, and investors may experience losses. Diversification, thorough research, and a long-term perspective are key to managing risks and maximizing returns in the stock market.
Pros of investing in stocks
Potential for high returns: Stocks have historically provided higher returns compared to other investment options over the long term, allowing investors to grow their wealth.
Ownership in companies: Buying stocks grants investors partial ownership in companies, providing them with a stake in the company’s success, potential dividends, and voting rights.
Diversification opportunities: Investing in stocks allows for diversification across different industries and sectors, reducing the risk associated with having all investments in a single asset class.
Liquidity: Stocks are highly liquid investments, meaning they can be bought or sold relatively quickly, providing investors with the ability to access their funds when needed.
Flexibility: Investors have the flexibility to choose from a wide range of stocks, industries, and investment strategies based on their risk tolerance, investment goals, and personal preferences.
Cons of investing in stocks
Volatility and market risk: Stock prices can be highly volatile, fluctuating in response to market conditions, economic factors, and company-specific news. This volatility can result in short-term losses and requires investors to tolerate market fluctuations.
Potential for loss: Investing in stocks carries the risk of losing some or all of the invested capital, particularly if the company underperforms or faces financial difficulties.
Lack of control: As minority shareholders, individual investors have limited control over the decision-making process of the company, leaving them reliant on the management’s actions and performance.
Psychological impact: Stock market fluctuations and price movements can create emotional stress for investors, leading to impulsive decision-making or panic selling during market downturns.
Time and expertise required: Successful stock investing requires time, research, and knowledge of financial markets. Investors need to stay informed about company performance, market trends, and economic indicators to make informed investment decisions. A lack of expertise or proper research can result in suboptimal investment choices.
Jumia’s IPO on the NYSE
Why should you invest in stocks?
While there are risks involved, investing in well-established companies or diversified portfolios can provide significant returns over time.
Stocks can be a veritable source of extra income. Many companies distribute dividends to their shareholders, providing a regular stream of income. Dividend stocks can be an attractive option for those seeking consistent returns.
In addition, the flexibility and liquidity that stocks offer allow you to adapt your investment strategy based on changing market conditions or personal financial goals.
While investing in stocks can be rewarding, it’s important to conduct thorough research, diversify your portfolio, and consider your risk tolerance before diving in. It’s also advisable to seek guidance from a financial advisor who can provide personalized advice based on your financial situation and goals.
Overall, stocks represent ownership in companies and offer individuals the potential for long-term growth, dividends, and voting rights. Investing in stocks can be a powerful tool for wealth creation, but it’s crucial to approach it with careful consideration and informed decision-making.
Final Remarks For those considering an entry into the stock market or diversifying their current portfolio, remember that knowledge is your most potent weapon. Invest time in understanding market trends, diversify your holdings, and never hesitate to seek advice from seasoned professionals. Your financial journey in the stock world begins with a single step, but make sure it’s a well-informed one. If you’re curious and eager to tap into this potential goldmine, start today by researching companies, understanding market dynamics, and staying up-to-date with the latest happenings. The world of stocks awaits – are you ready to dive in?
Disclosures:This material has been presented for informational and educational purposes only. The views expressed in the articles above are generalized and may not be appropriate for all investors. The information contained in this article should not be construed as, and may not be used in connection with, an offer to sell, or a solicitation of an offer to buy or hold, an interest in any security or investment product. There is no guarantee that past performance will recur or result in a positive outcome. Carefully consider your financial situation, including investment objective, time horizon, risk tolerance, and fees prior to making any investment decisions. No level of diversification or asset allocation can ensure profits or guarantee against losses. Articles do not reflect the views of DABA ADVISORS LLC and do not provide investment advice to Daba’s clients.
