Laws have been approved in Angola to regulate the future securities exchange for equity and debt. The Capital Markets Commission or Commissao do Mercado de Capitais (CMC) says that it plans to open a secondary debt market next year and this will pave the way for a securities exchange in 2016.
The regulator announced the new laws on 18 October. According to news story by Reuters, Archer Mangueira, head of the CMC, said the laws were published by presidential decree: “With these laws, Angola creates the conditions for the securities markets to be able to operate. The first securities market operations in Angola will be done with public debt paper, an instrument which help satisfy the State’s financing needs and also remunerates people and companies that invest in it.”
The securities exchange has been in the pipeline for more than a decade and most recently Bloomberg news reported after an interview on 28 June with Mangueira that the launch which in April had been had been announced as 2015, would now be only in 2016. The regulator is also working on plans for trading futures and commodities, including standardized contracts for certain financial products.
Treasury bills already bought and sold among financial institutions. Mangueira said in June that a public market for trading Angolan fixed-income notes had been planned to start by the end of September, using electronic trading. The aim is to help develop a yield curve. However, the secondary market for bonds was delayed to the first quarter of 2014, and Mangueira cautioned: “We might make some adjustments based on whether the legal instruments are fully developed and implemented, technological infrastructure is in place, and employees are trained.”
The CMC has signed an agreement with the London Stock Exchange to train staff.
In August 2012 Angola sold $1 billion of USD-denominated Eurobonds to selected investors maturing in 2019 at a yield of 7%, according to Bloomberg. Earlier this year ACMN reported that it would issue another $1bn-$bn but in October the Africa Report said the issue was postponed until 2014.
Fast-growing economy fuelled by oil
Angola is a major African economy, the second-largest oil producer after Nigeria and endowed with massive agricultural and mineral wealth, including diamonds that fuelled civil war which lasted from 1975-2002. Since peace in 2002 it has moved rapidly to rebuild but still has a poor record on transparency and this has held back some investment and business growth. Reuters describes it as “one of Africa’s fastest-growing, but most impenetrable economies”. Growth was forecast at 7.1% in 2013, down from 7.4% in 2012 with three quarters of budget revenue coming from crude oil.
Suitable listings have been identified including banks, telecoms and retail businesses in private ownership. Bloomberg said that in April Mangueira had expected that the stock exchange would have a market value of 10% of gross domestic product within 18 months of its start up. Expected listings would include the largest banks including Banco Angolano de Investimentos SA and Banco de Poupanca e Credito SA, as well as mobile-phone companies Unitel SA and Movicel Telecomunicacoes Lda.
Leading Angolan companies dominate many key sectors, often linked to senior political and other leaders, and Reuters says “investors and analysts have questioned whether the Angolan companies that dominate their sectors are in a position to fulfil international standard criteria on ownership disclosure, auditing and reporting of accounts, and corporate governance”. According to Bloomberg Angola is ranked 157th out of 176 countries on Transparency International’s 2012 Corruption Perceptions Index.