The stock exchanges on the continent continue their upward trend. In Kenya in particular, individual stocks are attracting a lot of attention, especially Safaricom and KCB. This proves that there is much movement on the African stock markets.
Stock exchanges in Europe and America have had a difficult week. On the contrary, the stock markets in Africa continue to bring joy to investors. Especially investors calculating in euro enjoy equity investments in Africa. This year, the Johannesburg stock exchange has already increased by more than 20 percent, calculated in euros. The Nairobi stock exchange went up by a good 15 percent.
The good mood among investors is spread across the entire continent. The Casablanca stock exchange was up by a good 7 percent and the BRVM stock exchange in Abidjan was up by around 5 percent. Only in Egypt and Nigeria have equity prices fallen slightly this year. But here too, individual stocks performed positively. In Cairo, Ajwa for Food Industries topped the favourites with a price increase of around 40 percent this year. And in Lagos, Access Bank was one of the favorites with a strong start to the week.
KCB attracts a lot of interest
In Nairobi, the Kenya Commercial Bank (KCB) attracted a lot of interest. KCB announced to buy a 62 percent stake of Banque Populaire du Rwanda. Now, KCB wants to take 100 percent and intends to submit an offer for the remaining shares. In the same time, KCB acquires a 100 percent stake of African Banking Corporation Tanzania. The Kenyans intend to merge these banks with the own local entities KCB already runs in these two countries.
These two transactions cost KCB 6 billion KES, 46 million EUR. The seller is Atlas Mara, listed at London Stock Exchange. Former Barclay’s chief executive Bob Diamond created Atlas Mara a couple of years ago. Now, Atlas Mara intends to use the proceeds from these two sales to pay its creditors.
Safaricom is about expanding to Ethiopia
However, the telecom operator Safaricom attracted even greater interest than KCB. The share price hit an all-time high of KES40.80. Safaricom announced just before it was on the verge of obtaining a cellular license in Ethiopia. The country is beginning now to open its market to private telecom operators. Safaricom’s share price has already risen 19 percent this year.
The good mood on African equity markets is hardly noticed in Europe. But the stock markets in Africa are developing extremely dynamically regardless of the Covid-19 pandemic. Even on the second-tier stock exchanges, the mood is quite good. The Accra Stock Exchange in Ghana even recorded strong price gains. But the BRVM exchange in Abidjan is also doing well. Food processor Nestlé Cote d’Ivoire has topped the list of favourites in Abidjan for the second week, thanks to a price gain of more than 30 percent.
A higher activity in fund raising
The good shape of the African stock markets is now also directly benefiting companies. The environment for IPOs has become friendlier. And so, the start-up Lamu, which is active in the online insurance market, was able to complete a financing round of 1.8 million dollars in Nairobi. This is an impressive achievement for a start-up in Africa.
“African equity capital market (ECM) activity in 2020 was the lowest it has been in the last decade, recording a significant decline in both volume and value”, stated PwC South Africa in their latest study about African capital markets. Only $ 600 million could be raised in 5 IPOs. 2017 marked a record with 30 IPOs, for which $ 3.1 billion could be raised.
For this year, observers expect a much higher activity in fund raising for African companies and much more movement on African stock markets. “Capital markets are key in mobilizing private capital to finance COVID recovery beyond growth and sustainable economic transformation”, said Gaëlle Arenson, Editor in Chief of Jeune Afrique Business+, at a conference in early April.