Ghana investors struggling to buy shares on their own markets because of low liquidity can now turn to Nigeria or Ivory Coast’s regional bourse to meet their demand.
United Capital Plc in Nigeria’s commercial hub of Lagos and Accra-based CAL Brokers Ltd. last month executed the first cross-border share transaction as part of a regional effort to pool West African markets and boost trading volumes. CAL Brokers bought 100 Dangote Cement Plc and 6,000 Guaranty Trust Bank Plc units from United Capital Securities, according to CAL.
West African investors have limited choice outside of Nigeria, where more than 180 securities are listed. Ghana’s bourse, with 35 equities, is struggling to reverse a 50 percent drop in trading volumes over the past four years as a plunge in the cedi deters foreign investors. The Bourse Regionale des Valeurs Mobilieres, or BRVM, which serves eight countries from its base in Abidjan in Ivory Coast, is also experiencing less deals among its 39 equities, while Sierra Leone has one stock.
“Investors can now tap into bigger pool of funds,” Geoffrey Maison, a research analyst at CAL, said in an interview on Wednesday. “Investors from Ghana can look out for opportunities on the Nigerian Stock Exchange or BRVM if they can’t get
CAL bought the Nigerian shares for its own portfolio to sell later, paying the commission and money transfer costs, he said. At this stage of the integration process, known as sponsored access, a broker can ask a dealer in another country to execute TRADES ON its behalf, Maison said. Previously, an investor wanting to buy equities in another country would have to go through an audit before opening an account with a broker.
The Nigeria Stock Exchange All Share Index lost more than 9 percent this year, while the Ghana Stock Exchange Composite Index is down 3.8 percent. Ivory Coast’s BRVM Composite Share Index advanced 16 percent.
The bourses will next move to direct access, where traders will be able to execute transactions in other markets, before creating a common board to display prices across the four markets.
The West African Capital Markets Integration Council, which was formed to drive the integration of the four West African markets, first wants to see more trades before opening the way for direct access to each other’s bourses, Adu Anane Antwi, director general of Ghana’s Securities and Exchange Commission and a member of the council, said by phone on Wednesday. The council has been working on rules and the technicalities of trading across markets since 2012.
“Even at this first stage if you’re interested in a Nigerian stock you don’t have to go to Nigeria to find a broker,” Antwi said. “You can buy the stock by talking to a broker here.”