Angolan stock exchange “may become African giant”

A study by Anthony Lopes Pinto, the chief of the Luanda offices of the Botswana-registered investment company Imara, suggests that the planned bourse – the Bolsa de Valores e Derivativos de Angola or BVDA – "has the potential to become the third largest in sub-Saharan Africa after the South African and Nigerian stock exchanges."

Mr Lopes Pinto holds that "efforts to obtain a sovereign credit rating in order to access international debt markets are well under way, and should reinforce long-term stability and result in a deepening of the market. Diversification of the economy away from oil continues apace and, commendably, the government has recently appointed Ernst & Young to eliminate fiscal inefficiencies."

"With the financial crisis now firmly behind us, we anticipate the opening of the Angolan bourse this year," the financial analyst adds. "This will augment the national savings rate, creating alternatives for Angolan companies in need of growth capital. Such a move will also attract foreign portfolio inflows, which globally have recovered strongly."

Mr Lopes Pinto’s assessment of the potential strength of an Angolan bourse considers two scenarios – a top-down macro view and a bottom-up appraisal with tight focus on 14 likely initial public offering (IPO) candidates.

The broad view considers Angola‘s estimated gross domestic product of US$ 84.9 billion and the capitalisation of African stock exchanges relative to GDP, an average of 42 percent. This calculation suggests that the BVDA could have a market capitalisation of US$ 36 billion, nearly three times the size of Kenya‘s well-established stock market.

A US$ 36 billion Angolan stock market would still be dwarfed by South Africa‘s JSE, with its 331 listing companies and total market cap of US$ 801 billion. But it would not be too far behind the Nigerian market, with 195 listings and a capitalisation of US$ 39.67 billion.

Source: Africa time