The Expansão takes an x-ray of the BODIVA markets and found that the stock market, which is normally the main stock exchange market in Angola, has almost no expression, since it continues to register few trades and a low level of liquidity.
In the Angola Debt and Stock Exchange (BODIVA) only three companies have the capital dispersed in the stock market, namely, the Angolan Investment Bank (BAI), Banco Caixa Geral Angola (BCGA) and state insurance company ENSA, that, still, less than 2% of the stock exchange trades are dominated by debt securities. BODIVA is on its way to becoming the fourth listed company in the Angolan stock exchange, after the failure of the oil company ACREP.
After a little more than two years, the Expansion made an x-ray of the markets BODIVA and found that the stock market, which is normally the main market for stock exchanges outside, in Angola has almost no expression, since it continues to register few trades and is market for a low level of liquidity, ie, walks but “chameleon steps”.
The market is still too small to draw definitive conclusions, but it seems clear that success on the stock exchange has much to do with the trust capital that is assigned to listed entities. And the fault is the very low volume of domestic investors in the stock market, the absence of large foreign institutional investors, but also the low level of education and financial literacy that do not allow the stock market to grow more rapidly.
Still, the shares are considered profitable instruments of the capital market. One of the facts that confirms the quality of the investment in shares, has to do with how the value of the quotes evolved (see graphs), also taking into account that listed companies have been distributing dividends. Despite some occasional declines, there is a clear path to its appreciation, supported by the analysis of stock prices. BAI, a company that opened the stock market with the sale of 10% of the shares held by the State in the bank, saw its shares listed on the stock exchange at a price of 20,640 Kz on July 9, 2022, and this Monday they were worth 54,000 Kz, which represents an appreciation of 162%.
The shares of BCGA have appreciated 90% by going from 5,000 Kz, at the time of admission to stock exchange (on September 29, 2022) to 9,500 Kz, this Monday, after reaching a peak of 23,500 in April. The ENSA insurer, which became the third listed company with a free float of 30% (share of a company that is available for free trading on the market), had the shares admitted to the price of 12,500 Kz, on September 30, and today they are worth 18,000 Kz, a valuation of 44%. It is worth remembering that after three days after admission, the shares of the largest insurer in the country appreciated 124% to 28,000, recording the highest quote of the insurer so far.
However, it is necessary to safeguard that we are still in a speculative moment, since very hardly if an investor today wanted to transform a significant lot of shares into cash, he would have a buyer interested in paying. It is also important to note that a deal of only 10 or 15 shares can make the prices of the stock in the Angolan stock exchange soar, this because the market is still very small and with a weak level of supply. As explained by Mariano Ferreira, CEO of Kyros SDVM, a securities distributor, “the significant appreciation of the share price after small volume trading, such as the sale of for example 10 shares, is usually related to structural and technical factors of the Angolan market characterized by a supply significantly lower than demand”.
Tiago Dionísio, chief economist of Eaglestone, understands that this strong appreciation in the transaction of a small number of shares is related to the lack of liquidity in the market. ” The frequency with which shares are traded on a given stock market reflects the liquidity of that market. A market is liquid if investors can buy or sell a large number of shares quickly without major price effects. Market liquidity is a desirable feature for any stock market because it reduces the trading risk of investors”, he explained.
Source: Expansão
