Sure Kamhunga
7 October 2008
Johannesburg — AFRICA's largest stock exchange has launched two Africa indices as part of its strategy to tap more investment funds into the continent.
JSE CEO Russell Loubser said yesterday the FTSE/JSE All Africa 40 index and the FTSE/JSE All Africa ex-South Africa 30 index were launched in partnership with index compiler FTSE Group.
They would provide global investors access to investment opportunities in Africa, a continent that analysts say has become an attractive option for investors fleeing financial turmoil in Europe and the US.
Unprecedented growth in commodity prices, improving political stability and attractive opportunities particularly in the mining, financial and telecoms sectors have become the magnets pulling investors burned by the worst global crisis in decades. In particular, equity funds were targeting companies with growth potential on the resource-rich continent.
Loubser said the FTSE/JSE All Africa 40 index would consist of the top 40 companies by market capitalisation from Egypt, Côte d'Ivoire, Kenya, Morocco, Mauritius, Nigeria, SA and Tunisia.
The FTSE/JSE All Africa
ex-South Africa 30 index would be a basket of the top 30 companies by market capitalisation from Egypt, Côte d'Ivoire, Kenya, Morocco, Mauritius, Nigeria and Tunisia.
"Providing investors worldwide with access to the African continent is an important part of the JSE's total Africa strategy, which also includes collaboration with other African exchanges and offering issuers the opportunity to dual list on our Africa Board," said Loubser.
"By partnering to form these indices, FTSE and the JSE are improving the visibility of the high quality companies that exist across the continent. The JSE hopes that this will benefit all exchanges, raising their profiles and thereby enhancing the capital raising opportunities for their issuers," he said.
Loubser said indices were suited to creation of financial products, such as index funds, warrants, certificates and exchange-traded funds. Both indices were designed to be representative of markets covered. Weighting of any single country is capped at 40% of the indices.
The launch of the indices formed part of a wider JSE strategy to create a continental board for listing stocks in some of Africa's biggest companies.
The JSE has been promoting the advantages to African exchanges of having their companies listed dually in the same way the JSE has benefited from the London listing of companies such as Old Mutual and SABMiller.
But so far the Nigeria Stock Exchange and Nairobi Stock Exchange have reacted coolly to the idea, saying they were not in a hurry to partner with the JSE.
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