Kenya, Nigeria, and Zimbabwe are at each other’s throats in the world of African capital markets. Indeed, these three countries are competing with one another to become the best, the most credible, and the most reliable stock market on the continent. The Johannesburg Stock Exchange (JSE) remains the largest stock market in Africa.
The Nigerian Stock Exchange (NSE) is the largest market of all three, with a market capitalization of over $400 billion with 161 listed companies. The Kenyan Stock Exchange (KSE) in Kenya is the second-largest and most liquid of the three markets, with a market capitalization of over $100 billion. And 62 listed companies. And the Zimbabwe Stock Exchange (ZSE) is the third-largest market, with a market capitalization of over $50 billion, and 48 listed companies.
Kenya’s equities market posted the weakest returns at 30.9%, while Nigeria and Zimbabwe reported losses of 24.3% and 20.7%, respectively, according to Business Insider Africa. The Capital Markets Authority (CMA) has attributed the fluctuating returns to foreign investor flight, as investors assessed certain African markets as riskier due to debt distress issues.
The NSE has been the leader in the region for many years, but the ZSE and the KSE are both growing rapidly. The NSE has been helped by a number of factors, including the country's recent path to economic growth and the government's efforts to improve the investment climate. The KSE is also growing, but it is still playing catch-up with the NSE and the ZSE.
The NSE seems to be the logical choice to achieve that capital-market glory. Despite the losses, which are generally temporary, it has been growing steadily in recent years. The market capitalization of the NSE has increased by over 50% in the past five years. The NSE is also becoming more internationalized, with a growing number of foreign investors trading on the exchange.
The NSE is a major driver of economic growth in Nigeria. The stock market provides a source of capital for businesses, which can help them to grow and create jobs. The stock market also provides a way for investors to participate in the growth of the Nigerian economy.
However, it does face significant challenges. The first issue is the low level of liquidity. Indeed, the Nigerian stock market is relatively illiquid, meaning that there is not a lot of trading volume. This can make it difficult for investors to buy and sell shares at a fair price. The second issue is the volatility of the economy. Under President Muhammadu Buhari, the economy grew much slower than usual. Unemployment was very high, inflation peaked, and GDP growth declined. President Tinubu is trying to revive the economy with a series of market-oriented policies.
Despite these challenges, the Nigerian stock market is a promising investment opportunity. The country has a growing economy and a large population, which provides a large pool of potential investors. The government is also taking steps to improve the investment climate in Nigeria, which will make the stock market more attractive to investors.
The NSE and Zimbabwe still have their shots too, but the NSE remains the leader among the three. As a matter of fact, the real opponent of the NSE is the JSE, which has a market capitalization of $1.3 trillion.
The JSE is a well-regulated exchange with a strong track record of corporate governance. The exchange has a number of safeguards in place to protect investors, including a listing committee that reviews all new listings and a trading halt mechanism that can be used to suspend trading in a particular security if there is a sudden and significant price movement. The NSE has a lot of work to do to catch up with the JSE.