African stocks are getting noticed, according to this AP piece from Zambia, as “foreign investors [and] economic growth fire up the continent’s indexes.

The following are some of the article’s most interesting points:

  • While the U. S. stock market faltered in late 2007, [Zambia’s] Lusaka Stock Exchange grew by more than 40 percent and racked up an overall market return of 102 percent, making it one of Africa’s top performing markets. Zambia’s stock exchange emerged in 1994 (with assistance from the World Bank) as part of a wave of market-opening measures that followed the country’s transition from one-party rule to multiparty democracy in 1991, and the selling of formerly state-owned businesses—including the country’s lucrative copper mines. Real growth started in 2004, thanks to high global copper prices, increasing mining investment and the cancellation of most of Zambia’s $7.2 billion foreign debt. Foreign portfolio investment increased by 57 percent from 2006 to 2007. Says Exchange boss Joseph Chikolwa, “You have to remember that Zambia came out of 30 years of socialism, so the concept of private capital wasn’t really appreciated. When the stock exchange was set up, there was about 700 known individual shareholders. Now we have well over 30,000, the majority of them Zambians.”
  • Only five sub-Saharan African countries had stock markets in 1989, according to the International Monetary Fund. Now, that number has risen to 16. The Johannesburg Stock Exchange is the largest and most developed; Swaziland has the smallest, with only eight companies; and Ethiopia just opened a new commodity exchange in Addis Ababa.
  • The Nigerian Stock Exchange also posted some of the highest gains in the world in 2007, as its all share index grew by almost 75 percent, propelled by banking stocks that tripled or quadrupled in just six months.
  • High yields can be attributed partly to high commodity prices (especially copper, oil and uranium in resource rich countries such as Nigeria and Zambia), economic growth, debt relief initiatives and recent market-friendly economic policies. However, with the U. S. (and European) economies wobbling, American and European investment funds are taking an increased interest in Africa, buying bargain-priced shares of undiscovered companies. Foreigners are even eyeing the stock market in politically isolated Zimbabwe, should President Robert Mugabe step down.
  • Most African stock markets aren’t affected by global trends, according to Joseph Rohm, a London- based vice president and analyst at investment firm T. Rowe Price International, which created an Africa and Middle East fund (TRAMX) last September. Rohm travels extensively in Africa and is particularly interested in Nigerian banks, infrastructure companies and consumer-oriented African stocks like mobile phone companies and Zambeef Products PLC, a Zambian food supplier whose stock price grew by 146 percent last year.
  • Foreign investment firms still rank most African markets as “high-risk,” and to that extent Rohm says that political instability remains the top risk for investing in African markets, despite recent democratic trends. Regulation and oversight varies. Zambia, however, has its own Securities and Exchange Commission, set up with help from the World Bank and donors. Among conditions set for listing, companies have to have a history of making profits for at least three years.


This blog will focus on Zambia at some future point. In the meantime, however, those interested should check out London economist Cho’s informative blog on the country and its ever improving market conditions. I found his post on Zambian Airways, for example, to be quite informative.