NYSE Euronext Inc. — the home of the New York Stock Exchange and other exchanges — has seen a threefold increase in the trading of African stocks on its exchanges over the past five years and a doubling of exchange traded funds focused on Africa in the past 12 to 18 months. Altogether, these increases stand as clear evidence of a “strong and growing focus” on doing business in Africa.
Stefan Jekel, managing director for Europe, Middle East and Africa at NYSE Euronext, made that point in a November 10 interview when he took time out of his busy schedule to discuss the exchange’s relationship with and outlook for Africa just after the opening bell rang to start trading for that day.
“The measure of trading in African firms on our platforms has basically tripled in the last five years,” said Jekel. “So we now have three times the liquidity in African stocks today on our platform compared to five years ago.”
There are 16 African stocks listed and traded on NYSE Euronext from six African countries: Cameroon (1), Cote d’Ivoire (1), Gabon (1), Morocco (3), Senegal (3) and South Africa (7). The total market capitalization of those listed African companies is $90 billion.
For investors who would like to participate in the continent’s growth by investing in a cross-section of companies in a one-stop solution, Jekel suggested the many Africa-focused exchange-traded funds (ETFs) that are available. “We have seen the number of exchange-traded funds that are focused on Africa double in the last 12 to 18 months.”
“There are funds that cover South Africa, Africa, Africa’s top 40 investments, and those are all available on our platforms here in Europe and the U.S. … all with different specializations, differentiations. … So investors find a variety of solutions and opportunities to participate in the growth that can be found across Africa.”
NYSE Euronext is “very closely monitoring” the African investment climate, Jekel said. “I do not mean that in a passive way. We are very involved in initiatives in highlighting investment in Africa.”
One such initiative, he said, is its annual Ai Index Series Summit held in conjunction with Africa-investor.com (Ai). The two companies recently hosted their third annual summit, which featured Robert Rubin, former U.S. treasury secretary and a member of the Africa Progress Panel, and Tony Blair, the former British prime minister, who addressed the summit via a video message.
On African stock exchanges, Jekel said, NYSE Euronext enjoys its closest ties with its client-partner exchanges in Casablanca, Tunis and Gabon, but has close ties with exchanges in South Africa, Egypt and others. There are some 29 functioning stock exchanges across the continent, with Egypt, Nigeria and South Africa accounting for 75 percent of the companies listed on the continent.
Jekel said he soon plans to travel to South Africa for meetings with members of that country’s exchange to, as he put it, “grow our list of African issuers” and continue building momentum in the Africa investment area.
The Association of African Stock Exchanges met in Lusaka, Zambia, November 10–12. “Several of the stock exchanges are friends and are, of course, business partners” of NYSE Euronext, he said.
“We are a technology partner to the Casablanca Stock Market and to the … Bourse Régionale des Valeurs Mobilières d’Africque Centrale, or BVMAC, in Gabon and the Tunis Stock Market. By providing technology to these partners, these stock exchanges are using the same engine that NYSE/Euronext use,” and share much of the insight and institutional knowledge as well, he said.
Training sessions are offered by NYSE Euronext for sister exchanges in Africa and worldwide “mini-internships,” he said, where visitors from other exchanges can “job-shadow” NYSE Euronext personnel.
Stock markets are of extreme importance to all nations worldwide, he said. “No matter where you are, developed or emerging markets, stock exchanges are where investors meet ideas — where companies come to raise capital to finance their business ideas, to finance their growth, and where investors come to participate in these success stories.”
Stock markets, he said, are also an important vehicle for bringing direct foreign investment into a country and serve as a vehicle that “allows investors to participate in the various growth opportunities that exist in emerging market nations and Africa in particular.”
Jekel stressed two key pillars of any functioning stock market: reliability and transparency. “I think those are some of the core principles and pillars of a stock exchange operation, and we see those philosophies being naturally adopted in Africa, so that is very comforting.”
Additionally, he said, “We see business and democracy going forward hand in hand in positive momentum” across Africa.
Jekel said industry experts who cover Africa on a daily basis all agree that there is a “strong and growing focus on Africa and that it will only grow from here. We see that due to the entrepreneurial spirit, the success stories that come out of Africa and the growing liquidity in its stock markets. We believe those are highly encouraging indicators of development and what is to come.”
Entrepreneurs “are key everywhere, be it in the U.S. or Africa,” Jekel said. “They are the job engines. That is typically where job creation and wealth is coming from and starting.”
“In any economy, in any part of the world, developed or emerging, those are the key pillars, absent which no stock market, no financing mechanism can work.”
Looking to the future, Jekel said, “I think there is consensus among those who are following Africa that right now the BRIC countries [Brazil, Russia, India, China] have a very large role to play in world markets, but several industry insiders are pointing to Africa as a region and continent to pay close attention to over the next 10 to 20 years.”