Case studies of SSA stock markets
African exchanges can be small, illiquid and difficult to navigate. Some regulators are making efforts to resolve these issues, while others struggle to keep up with investors' demands.
Name: Nairobi Securities Exchange
Market cap: $24.1 billion (FY’13)
The banking sector in Kenya dominates the securities exchange, with stalwarts such as Kenya Commercial Bank (KCB) and Equity Bank among the most popular stocks.
“Kenyan banks are more expensive than their Nigerian counterparts,” says Brian Mugabe, head of research for Africa ex-South Africa at Imara. “Generally speaking, they are more mature, more stable, and earnings potential is high. Moreover, there are fewer options to buy there, so prices for good stocks including KCB and Equity Bank are pushed up.”
Mugabe adds: “In Nigeria, on average the price to earnings ratio is around six, while dividend yields are around the 6% to 7% mark. Nigerian banks are cheap.”
And with one of the more developed exchanges and financial landscapes in the region, Kenya has strong local investor participation that has helped the exchange weather times of capital flight.
Name: Dar Es Salaam Stock Exchange
Market cap: $10.3