Several reforms over the past two years are helping to pave the way for greater liquidity on the Abidjan-based Bourse Régionale des Valeurs Mobilières (BRVM)The bourse has seen its market capitalisation more than double since 2012, but as with many emerging and frontier markets, trading is low and the exchange is dominated by “sit and hold” institutional investors. To address this and expand the base of retail participation in the country’s capital markets, the authorities and brokerages have been rolling out new trading instruments to encourage participation from individual investors in the UEMOA region and abroad.
A host of new tools should improve trading churn and accessibility – two key obstacles for many West African stock markets. In December 2015 local brokerage Impaxis revamped its web trading platform and launched the first mobile market app. The service is aimed at increasing market participation by providing real-time stock quotes and portfolio data, though the bourse’s regulator has yet to authorise direct trading via mobile devices. Other tools should also play a key part in opening the exchange up to a wider audience. A SMS market news service in Côte d’Ivoire, launched by the BRVM and telecoms operator MTN in May 2015, now has more than 100,000 subscribers, according to Edoh Kossi Aménounvé, director-general of the BRVM. The stock market is also looking to court foreign and diaspora investors, rolling out a series of so-called BRVM Investment Days, when the BRVM sets up shop in key financial centres around the world to promote its activities.
Earlier reforms have helped the exchange improve liquidity levels in the past. In 2012 regulators gave the go-ahead for share-splitting in a bid to attract smaller investors. The following year, they adopted a continuous, real-time trading model, which nearly doubled bourse turnover.
In late 2015 the BRVM announced that companies listed on the exchange must float at least 20% of their capital, within a range of 2m-10m shares, thus increasing the volume of shares available and ensuring a responsible minimal value per share.
While technical and regulatory reforms of this nature have gone some way towards boosting liquidity, new initial public offerings (IPOs) are seen as particularly effective at supporting more robust secondary market trading. The exchange is already putting measures in place to encourage new IPOs, according to Pierre Goudiaby Atépa, president of the BRVM’s administrative council, including plans to set up a third segment for small and medium-sized enterprises and high-growth companies. The exchange is also considering launching an additional segment for mining companies, he told media in February 2016.
Planned privatisation in the region, including a handful of Ivorian institutions, is another potential pipeline for securing new listings, Amenounve said, with measures aimed at attracting private companies, such as preferential tax rates, expected to be rolled out.
A Common Market
To help increase volumes further, the BVRM – alongside the Nigerian Stock Exchange and the Ghana Stock Exchange – is working to improve integration among West Africa’s financial markets. Amenounve sees the common market as essential in an increasingly competitive environment. “For our exchange to hold any weight, it needs to be larger, and one meaningful way to do this would be to integrate with others in West Africa,” he told media.
The exchanges are targeting an operational, common West African Securities Market, with a single order book for all 15 members of the Economic Community of West African States by 2020. Work is moving ahead on the first phase of planned integration, with outside brokers gradually being granted sponsored access to trade and settle in new markets via local brokers. The second phase, which will give qualified West African brokers direct market access across the region, is expected to be implemented in 2017.
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