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The Emerging Africa Team


Since 1997, Emerging Africa Ltd. has been EAR <GO> on Bloomberg. We publish top down and bottom up data and research focusing on the stock markets of Africa.  Emerging Africa reports on pertinent African economic and political news as it relates to African stock markets. On EAR <GO>
we also provide African public company reports along with daily bid and ask currency prices from 29 African countries.

A prudent investor learns to look at the trees, not at the forest.  This is particularly sound advice when it comes to today's Africa. Lurking behind the forest of sensational headlines describing conflicts that have infected parts of Africa for years, are thriving enclaves of peace, steady economic growth and high returns on investment. In many countries of the continent, business - fueled by privatization, democracy and capitalism - is roaring ahead as if to make up for lost time.

According to the World Bank, net Foreign Direct Investment (FDI) inflows to countries in Sub-Saharan Africa grew by 16 percent to US$ 43 billion in 2013. As a continent, however, Africa's share of the foreign portfolio investment in developing countries is roughly 5%. The over-achieving yet undervalued publicly traded companies of Africa have yet to be truly discovered by most US and global investors.  The African stock market scenario is poised for rapid expansion. Presently there are roughly 2,000 stocks listed on African stock exchanges.

Thomas Mims, CEO of Emerging Africa Ltd, was quoted in the October 2004 issue of Black Enterprise Magazine: "The African market cap is around $300 billion (October 2004). I believe in 5 years it's going to be over $1 trillion"

African market capitalization reached US$ 1.8 trillion year end 2007, a year earlier than predicted by Mr. Mims.

In 2007, the "Nex-Rubica Emerging Africa Top 40 Index (NXR Top 40)" was featured on EAR. The Index measured the performance of 40 companies that trade on the stock markets of Egypt, Kenya, Mauritius, Morocco and Nigeria. These markets were chosen because they are among the most liquid of Africa's markets and all feature T+3 settlement.


The Index was a free float adjusted, market capitalization weighted index that captures over 50% of the market capitalization of Sub-Saharan Africa (excluding South Africa). The 40 public companies in the Index all have: a minimum market capitalization of US$ 500 million and free float greater than 25%

 Nex-Rubica Emerging Africa Top 40 Year End 2007 Results










Index Points


Market Cap ($)













 (* Y/E 2006 Market Cap $69,888,033,361)


Research shows that economies fare best where capital is inexpensive, plentiful and fairly allocated.  The "Democratization of Capital" is a powerful force that feeds upon itself as healthier economies attract more capital by which to grow healthier. The greater the access to capital markets, the greater the chance that African entrepreneurs will get their ideas financed, thereby creating jobs and higher levels of prosperity.

With a fraction of the size, and less than half the population, raw materials and natural resources of Africa, the US has a stock market capitalization 50 times greater than that of African stocks before the historic turmoil of 2008. There were scores of US companies, each that had a market value that exceeded total African market value. Cisco, Microsoft, Intel and GE are examples.   

The low liquidity levels of African stock markets is one of the major barriers to market expansion. Investors - large and small - seeking to engage African stock markets have discovered that access to reliable information and data from the capital markets of Africa is limited.

 The African stock markets are improving by:

·   lowering transaction costs,

·   becoming more liquid and creating more depth,

·   improving transparency,

·   consolidation through the regionalization of markets (cross border listings, regional exchanges)

·   greater initiative from global financial intermediaries

These initiatives are necessary to create and introduce more products such as Global Depositary Receipts (GDRs), American Depositary Receipts (ADRs) and qualifying investments under SEC Rule 144 for both greater accessibility and capital raising programs to support privatizations as well as growth in listed stocks throughout Africa.

Globally, trading volume, along with the number of newly listed stocks is increasing.  The number of investors is growing rapidly, and day trading has added a new layer to the industry. Satisfying the demands of investors seeking diversity leads almost inevitably to Africa, where promising companies have been overlooked. Numerous enterprises, including Small & Medium Enterprises (SMEs) stand poised to become new listings on the African stock markets.  

One benefit of simplifying investment in Africa pfor US and other global investors will be to funnel money from the richest nations to African businesses that represent new opportunities. US based pension funds with mandates for socially conscious investing cannot invest in small cap foreign companies due to ERISA restrictions. However, these funds are allowed to invest in ADRs.  A small fraction of the trillions of dollars in US pension funds, if directed to African ADRs and ADR funds; would have a significant and positive impact on the continent.  For example, as the capital markets of Africa become more accessible; African enterprises seeking to benefit from duty free exports to the US under the AGOA Act will have more opportunities to raise capital in order to build production infrastructure.

The African stock markets were not directly affected by the global sub-prime crisis now and will not be in the future. African stocks have not lured the so-called hot money, or highly volatile short-term funds which many analysts have blamed for exaggerating the peaks and troughs of equity investment. Rather, many of Africa's stocks are in the hands of institutions that follow a buy-and-hold strategy. This group includes governments maintaining minority holdings and those involved in management.  While such investors offer some stability to share prices, the down side is that the long-term view that forms this type of investor's decisions has exacerbated already low levels of liquidity.  The low liquidity levels of African stock exchanges are often cited as the major barrier to expansion. On the plus side, these types of investors can also act as a buffer against share price volatility.

Several factors and recent developments, underscore the need for, and the likely success of, a consolidated stock market for Africa. They include:

·   Technology's impact on the securities and many other industries (especially the Internet)

·   The trend towards global consolidation of mature securities exchanges

·   The high rate of return on foreign direct investment in Africa

·   Inefficiencies of some African capital markets

·   The vast potential of the resource rich continent

One only needs to look at the NASDAQ for an example of how technology can advance the capital markets. At its inception, NASDAQ was seen as having limited prospects as compared to the New York Stock Exchange.  Today, NASDAQ trades as much as twice the volume of the NYSE.  High cost legacy systems for stock trading are being replaced by low cost web-based systems with proven technology, thereby lowering barriers to the creation of new security exchanges.

Africa, by implementing a more efficient capital market structure, will have an even higher rate of capital flows. The number of transactions will grow. The result will be more vitality in the African stock markets. Capital is always eager for new opportunities, particularly those that produce the most attractive returns / yields.


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