Investability of Africa’s listed markets
A driving factor of investability is the size of the free-float, which represents the proportion of a listed company’s shares that is available for active trading. Thus, it excludes any director’s holdings, shares with lock-in periods and those otherwise held without the intention of trading because of a regulatory or commercial requirement. Excluding these shares from the liquidity consideration provides a more accurate representation of the investability and liquidity of an exchange.
The JSE, which is not shown due to its comparative size, has an adjusted market capitalisation of USD 852bn and a free-float of 76%. In the emerging markets, the JSE has the third-highest market capitalisation after the Shanghai Stock Exchange (SHSE) at USD 1.4trn with a free-float of 43% and the Shenzhen Stock Exchange (SZSE) at USD 918bn with a free-float of 48%. In the comparable frontier markets, the Dhaka Stock Exchange (DSE) has the highest market capitalisation at USD 38bn with a free-float of 31%. The Casablanca Stock Exchange (CBSE) has the highest market capitalisation among the comparable frontier markets.
The lack of liquidity across the African exchanges is further shown by the relatively low levels of free-float across several African exchanges.
Interestingly, the four largest exchanges (ex. SA) measured by market capitalisation (CBSE, CASE, NGSE and NASE) had lower free-floats, while the smaller exchanges by market capitalisation tended to have higher free-floats.
The JSE ranks the highest in terms of market capitalisation and on an adjusted market capitalisation basis. It also has the highest free float of 76%. Outside of the JSE, the CBSE leads the group of African exchanges as having both the highest market capitalisation and adjusted market capitalisation. While the CASE ranks ahead of the NGSE in terms of market capitalisation, it has a slightly lower adjusted market capitalisation due to the relatively lower free-float. It is interesting to note that despite the CASE’s relatively low level of free-float of 32% it has the highest daily value traded (ex. JSE) by far.
The Namibian stock exchange (NMSE) exhibits the highest free-float (ex. JSE) at 72%, followed by the LUSE at 63%. In this report’s 2018 edition, the Ghana Stock Exchange (GHSE) had the highest free float (ex JSE) at 66%, which has since decreased to 56%. The lowest free-float level relates to the Bourse Régionale des Valeurs Mobilières (BRVM) exchange, which has a free-float level of only 3%.