Oil-rich Angola to launch stock exchange in 2015

AFTER a decade-long wait, the Angolan stock exchange is due for lift-off in 2015, with trading in government paper from the second half of this year and corporate paper from next year.

Analysts said the oil-rich country — which ended its bloody 27-year civil war in 2002 — could boast the third-biggest market in Africa in three to five years as a number of banks came to market and “the rest follow soon after”.

The stock exchange building has already been built, but it has been standing idle and companies and investors have been left twiddling their thumbs due to a lack of political will to get the ball rolling, as well as a degree of immaturity in the corporate sector to match listing rules.

Analysts warned trading on the new market might initially be slow. Imara SP Reid, however, which set up its Angolan office in anticipation of an exchange in 2009, on Friday said that exciting potential still existed and the banking sector was expected to enter the listed ranks quite quickly as they had a number of the required standards, such as auditing, in place.

South African companies have already noticed the potential. Standard Bank was granted a banking licence in 2009 and plans to vastly increase its branch network despite stiff competition from 21 other banks in the country. Nedbank Capital has made some successful moves on the investment side, while Investec has been eyeing the stock-market launch since 2010 as its seeks more African-listed stocks for its funds to invest in.

Nampak established a plant in 2011, while brewer SABMiller has also recently expanded its presence, with brewers seen as one of the early listed areas to grow, together with telecoms and banks. Shoprite has been in the country since 2003, while Angola’s government is known to want to entice more diamond listings as only 40% of diamondrich territory has been explored.

The bourse should, however, become the third-largest, outside SA and Nigeria, within three to five years with a market capitalisation of $17bn on equities, Imara Holdings CEO Mark Tunmer said on Friday.

The financial crisis has hit expectations somewhat as previous forecasts had placed the market at a potential $36bn, but trading volumes have taken a knock across Africa. “A challenge will be to have liquidity — to have sellers,” said Mr Tunmer.

Angola’s Capitals Market Commission CEO Archer Mangueira said last week that the public debt bond regulated market — which was been given its legal framework — was an important tool for developing direct contact between the treasury and the investors interested in procuring the bonds.

It has not escaped the notice of African leaders that foreigners are interested in putting money into formalised exchanges and products, and countries are scrambling for a piece of the action. Zambia hoped to tap international capital markets for $500m last year‚ but raised $12bn in terms of interest.

Angola’s economy is forecast to grow 7.1% this year from 8% last year. The middle class makes up a small percentage of the population and more diversification away from oil is needed. While 50% of workers are in agriculture, only 1% work in the more lucrative petroleum sector (it still makes up 50% of Angola’s gross domestic product).

The African Securities Exchanges Association has 29 member states, but a number of plans are afoot to expand Africa’s market network.

The JSE, known to be trying to sell its advanced trading technology solutions to Southern African Development Community partners, did not want to comment on the Angolan development on Friday. A delegation from the London Stock Exchange visited Angola in February to discuss opportunities.