Serrari Group

Finance & Investment News|Finance Calculators|Online Courses|Personal Finance Tips Business Finance Tips Macro Economic News Investments News Financial & Investments Calculators Compare Economies & Financial Products My Serrari Serrari Ed Online Courses

East African Stock Markets Contemplate Dollar-Denominated Securities to Bolster Investor Confidence

Innovative Shifts in East African Equities: As East African stock markets navigate the complexities of global trade, executives are deliberating a significant policy shift. The proposal under consideration involves allowing companies to issue debt instruments in hard currency, primarily the US dollar. This move aims to introduce a competitive edge against commercial banks, particularly in extending foreign currency loans to firms deeply involved in international trade.

Central Bank Hesitancy: Despite its potential benefits, the proposal encounters resistance from regional central banks, wary of approving such a novel approach. The crux of the matter lies in the necessity for central bank endorsement, given the current regulatory landscape where only governments can issue Eurobonds, and commercial banks are privileged to trade in hard currency, leaving capital markets sidelined from such transactions.

Seeking Stability Amidst Currency Risks: Proponents of the plan stress its ability to shield both issuers and investors from the significant risks associated with local currency fluctuations. Currently, debt and equity instruments traded on regional exchanges are exclusively denominated in local currencies. However, recognizing investors’ apprehensions regarding local currency exposures, there’s a growing consensus within East African Stock Exchanges Association (EASEA) to explore incorporating hard currency instruments.

Collaborative Efforts for Market Integration: Concurrently, discussions within the technical committee of the African Securities Exchanges Association (ASEA) are underway, signifying a broader continental effort towards market integration and efficiency enhancement. These deliberations align with initiatives such as the African Exchanges Linkage Project (AELP), facilitated by ASEA in collaboration with the African Development Bank (AfDB).

Facilitating Cross-Border Trading: Launched in December 2022, the first phase of AELP successfully connected seven stock exchanges across 14 African countries. Now, plans are in motion to expand this network to 15 exchanges, aiming to provide investors access to over 2,000 securities listed on various capital markets. Such initiatives resonate with the goals outlined in the African Union’s Agenda 2063 and the African Continental Free Trade Agreement, fostering market liberalization and capital movement to bolster economic integration across the continent.

AfDB’s Support: The continued support of the African Development Bank underscores the significance of initiatives aimed at strengthening African capital markets. This support aligns with broader developmental agendas, fostering an environment conducive to investment and growth.

Unlocking Opportunities: The contemplation of dollar-denominated instruments signifies a crucial step in enhancing resilience and attracting global investors amid evolving economic landscapes. While challenges persist, concerted efforts by regional stakeholders promise to unlock new opportunities and propel Africa towards greater financial inclusion and prosperity.

photo source: Google

By: Montel Kamau

Serrari Financial Analyst

9th April, 2024

Share this article:
Article and News Disclaimer

The information provided on www.serrarigroup.com is for general informational purposes only. While we strive to keep the information up to date and accurate, we make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability, or availability with respect to the website or the information, products, services, or related graphics contained on the website for any purpose. Any reliance you place on such information is therefore strictly at your own risk.

www.serrarigroup.com is not responsible for any errors or omissions, or for the results obtained from the use of this information. All information on the website is provided on an "as-is" basis, with no guarantee of completeness, accuracy, timeliness, or of the results obtained from the use of this information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose.

In no event will www.serrarigroup.com be liable to you or anyone else for any decision made or action taken in reliance on the information provided on the website or for any consequential, special, or similar damages, even if advised of the possibility of such damages.

The articles, news, and information presented on www.serrarigroup.com reflect the opinions of the respective authors and contributors and do not necessarily represent the views of the website or its management. Any views or opinions expressed are solely those of the individual authors and do not represent the website's views or opinions as a whole.

The content on www.serrarigroup.com may include links to external websites, which are provided for convenience and informational purposes only. We have no control over the nature, content, and availability of those sites. The inclusion of any links does not necessarily imply a recommendation or endorsement of the views expressed within them.

Every effort is made to keep the website up and running smoothly. However, www.serrarigroup.com takes no responsibility for, and will not be liable for, the website being temporarily unavailable due to technical issues beyond our control.

Please note that laws, regulations, and information can change rapidly, and we advise you to conduct further research and seek professional advice when necessary.

By using www.serrarigroup.com, you agree to this disclaimer and its terms. If you do not agree with this disclaimer, please do not use the website.

www.serrarigroup.com, reserves the right to update, modify, or remove any part of this disclaimer without prior notice. It is your responsibility to review this disclaimer periodically for changes.

Serrari Group 2023

 

×