Abidjan-based regional bourse eyes expansion

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ONGOING reforms look set to pave the way for greater liquidity on the Abidjan-based Bourse Régionale des Valeurs Mobilières (BRVM), with new listings expected at the regional exchange in the coming months.

The bourse, which serves eight West African countries – Côte d’Ivoire, Benin, Burkina Faso, Guinea-Bissau, Mali, Niger, Senegal and Togo ­– has seen its market capitalisation double since 2012.

Heightened activity should allow the BRVM to continue its solid recent performance, which earned it the top spot among African bourses in 2015, with 17.8 percent growth on the main index, the Oxford Business Group (OBG) reports.

Speaking in early February, Edoh Kossi Amenounve, director-general of the BRVM, said he expected market capitalisation to rise from CFA7.5trn (€11.4bn) last year to CFA8trn (€12.2bn) by the end of 2016. The exchange is also targeting an increase in trading values from CFA337.9bn (€515.1m) to CFA400bn (€610m).

A host of new tools should improve trading churn and accessibility – two key obstacles for many West African stock markets.

In December 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 recently added 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, Amenounve said.

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 to international investors. The next round will involve highlighting the BRVM’s planned diaspora bonds issue, scheduled for this year, which it hopes will generate additional financing for development.

Pierre Goudiaby: the exchange is already putting measures in place to encourage new IPOs
Pierre Goudiaby: the exchange is already putting measures in place to encourage new IPOs

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, and 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 percent of their capital, within a range of 2 million to 10 million shares, thereby increasing the volume of shares available and ensuring a responsible minimal value per share, local media reported.

While technical and regulatory reforms of this nature have gone someway 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 SMEs and high-growth companies. The exchange is also considering launching an additional segment for mining companies, he told media in February.

Planned privatisation in the region, including that of two Ivoirian banks this year, 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.

Around 20 new companies were slated to list on the BRVM over the next three years, he told media earlier this year; currently 39 companies are listed.

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 rolled out in

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