Listed equity

Investability of Africa’s listed markets

Relative illiquid stock exchanges, high costs of trading and fees detract from the investability of Africa’s listed markets.


Outside of the Johannesburg Stock Exchange, Africa’s stock exchanges remain stubbornly illiquid, with the Egyptian Exchange (EGX), currently exhibiting the second highest daily turnover across the African exchanges with a total of USD 72m traded daily, compared to the JSE’s USD 1 800m.

The next most liquid exchange, by turnover for 2018, is the Casablanca Stock Exchange followed by the Nigerian Stock Exchange (NGSE), at USD 17m and USD 15m respectively, but this still represents less than 1% of the trade on the JSE. The NGSE showed a 71% increase in daily turnover during 2018, due to a median increase in turnover of 125% across its 10 largest companies, all of which are in the Financial sector. This improvement can be attributed to the recovery of the oil price seen towards the end of 2017 with the knock-on effect being increased investor sentiment as economic fundamentals see improvement.

The Financial sector has on average the highest daily turnover value across the African exchanges (ex. JSE) and continues to house most of the market capitalisation. Of the capital held within this sector, 63% of this is concentrated across the CBSE, EGX and NGSE exchanges, at 30%,18% and 15% respectively.

African exchanges relatively illiquid Daily traded value by sector (1-year average) Download the graph PDF (34kb)


A driving factor of liquidity is the size of the free-float. The free-float represents the proportion of a listed companies’ shares that are available for active trading and thus exclude any directors’ holdings, shares with lock-in periods and those otherwise held without the intention of trading pursuant to a regulatory or commercial purpose. Excluding these shares from the liquidity consideration, we get a truer representation of the liquidity in an exchange. The JSE, which is not shown due to its comparative size, has an adjusted market capitalisation of USD 750bn and a free-float of 73%.

From the graph, it appears that on average larger exchanges exhibit higher levels of free-float. This is to be expected. However, the spread amongst the top and bottom half of the group is less than 12%. The small difference is due to the low free-floats of the EGX and CBSE exchanges (average of 26%) relative to the size of their market capitalisations.

The JSE ranks highest in terms of market capitalisation and on an adjusted market capitalisation basis. It also has highest free-float of 73%.

Low free-float, low liquidity Maket capitalisation vs. Adjusted market capitalisation Download the graph PDF (30kb)

NGSE leads the group (ex. JSE) as having the highest adjusted market capitalisation. It has a free-float of 46%. The CBSE and EGX rank ahead of the NGSE, by market capitalisation, however, they place second and third, respectively when looking at adjusted market capitalisation. This is due to the relatively small free-floats of both these exchanges, averaging 26%, compared to NGSE’s 46%. Interesting to note is despite CASE’s relatively low level of free-float, it has the highest daily value traded (ex JSE) by far.

Ghana Stock Exchange (GHSE) exhibits the highest free-float (ex. JSE) at 66%, followed by Namibian Stock Exchange (NSX) at 61%. The lowest free-float level relates to the Bourse Régionale des Valeurs Mobilières (BRVM) exchange, which has a free-float level of only 2%.