West African stock exchange report 2013

To continue a trend from 12 months ago, I thought I’d give you a little update on how my portfolio of shares is doing on the Abidjan-based West African stock exchange (BRVM). There’s been a bit more media buzz in 2013 about African stock markets (in fact I don’t recall seeing much comment at all on the subject before that). As a reminder, I started investing as an individual in 2011. In the first year my portfolio gained 17.8%, then 27.2% last year.

I was able to invest a little bit more at the beginning of the year, though my portfolio is still quite small. Everything’s managed by my bank, and to be honest they are extremely inactive by Western standards, but I won’t complain seen as the results seem to be good.

This year I’m up…29.2%. Not bad, eh? That’s despite taking my first ever significant hit, which was on natural rubber shares, which plummeted quite sharply as the global market took (what looks like a long-term) nose dive, and the Ivorian government also introduced new taxes on rubber. The first quarter of the year was good as people built up to expectations of high dividends. The middle period of the year was quiet, but particularly since the exchange moved to real-time trading, the market has been rising nicely.

Compared to other investments in Ivory Coast, I think it’s a relatively safe way in. Capitalisation is low, and the market can be surprisingly nonreactive – shares for instance weren’t much affected by the post-election disaster of 2010-11. But particularly for the diaspora, I think the exchange is a great way to be investing and involved, without the risk of some second cousin stealing from your investment or getting hit by a scam/corrupt official.

To get going, it’s standard to need an account with the bank you’ll be using and a minimum investment of 1 million CFA (about $2000). As a reminder, the CFA franc is fixed to the euro, so you don’t have much in the way of exchange rate issues.

Given the majority of the companies listed are Ivorian, the Ivorian economy is the one to watch (though Sonatel is by far the biggest company listed). The coming year looks to see continuing upward trends for the Ivorian economy with reconciliation starting to inch forward and security improving. The African Development Bank should move many of their staff back this year, the government plans a boost to public investments and a series of state privatizations will increase the number of listed companies on the exchange. Presidential elections are on the horizon in 2015 and will of course be a big test.

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Addition – The final day of the year saw a decent rise, so my actual 2013 rise in value was 31.4%.