Lack Of Liquidity Drives Investors Away From Africa: Hisham El-Khazindar

Hisham El-Khazindar, Managing Director and Co-Founder of Citadel Capital, said the poor liquidity is the main challenge facing African stock markets as it drives investors away from investing in these markets. Liquidity is one of the main attractive factors among many other factors such as exit guarantees, transparency standards and disclosure processes, he added.

The current political turmoil and economic fluctuations have posted negative impact on the performance of the Egyptian market, he noted. However, only one company has exited from the Egyptian market amid the current unrests, affirming the strength of Egypt’s economy.

Determining market capitalization in initial public offerings is important to make the African stock markets acquire large market capitalization to be ranked among large regional stock markets, he affirmed.

As African stock markets, including Egyptian Exchange and Johannesburg Stock Exchange, have large number of small and medium-sized listed companies, they do not have the ability to compete with world’s stock markets. Therefore, the capitals of companies, wishing to be listed in the market, shall be first determined, he noted.

He has referred that the African continent is a large one and has numerous countries that have direct investment opportunities, but the challenge is how to create competition with the global markets like Singapore and New York. So it is necessary to open regional markets between the continent’s countries and unify the trading systems. This would be through the governments of the countries that willing to establish regional market. In case of not opening these markets, the continent wouldn’t be able to attract investments. For example, there are local companies exiting the African stock markets to be listed in other stock markets like Singapore and then reach to New York bourse.

He added that the biggest challenge to establish regional markets is to make sure that the systems and infrastructure of African stock markets are consistent.

“I think listing global partnerships in the African bourses can promote Africa not only to compete on the continental level but also the global one” he said.

He finished his keynote speech; expecting the African markets to head to establish a regional bourse that works on attracting investors.