Angola, Africa’s second-biggest oil producer, expects its stock exchange to have a market value of 10 percent of gross domestic product within 18 months of its startup, making it at least the continent’s sixth biggest.
The capitalization of the exchange, which is set to start in 2015, would be a minimum of $11 billion based on last year’s output of $114 billion, Archer Mangueira, president of the Capital Markets Commission, said in an interview on April 10 in Luanda, the capital. South Africa’s bourse is the continent’s largest at $842 billion, more than double its GDP.
“There is light in the tunnel that will encourage foreign investors to join our capital markets,” he said.
Angola is developing the market to attract investment as it continues rebuilding after a 27-year civil war that ended in 2002. With the government forecasting economic growth of 7.1 percent this year from 7.4 percent in 2012, it’s under pressure from volatility in the price of oil, which accounts for three- quarters of budget revenue, according to the International Monetary Fund. Angola ranks 157th out of 176 countries on Transparency International’s 2012 Corruption Perceptions Index
A secondary bond market will start this year to help develop a yield curve, Mangueira said. The curve is a graph that plots returns on investment over time and can help investors asses risk in an economy, such as the potential for default. Debt with longer terms generally earn more for the lender than shorter duration securities, such as Treasury bills.
“The development of a secondary market this year will give us a reference point for corporate debt and a stock market to follow,” said Mangueira, a 50-year-old former economic adviser to President Jose Eduardo dos Santos. “A yield curve is very important” for marketing securities, he said.
Angola’s largest banks, which include Banco Angolano de Investimentos SA and Banco de Poupanca e Credito SA, as well as mobile-phone companies Unitel SA and Movicel Telecomunicacoes Lda., are expected to list on the exchange, Mangueira said. Local coffee, oil and cement makers may also offer stock, he said.
Domestic oil companies will raise capital from the bourse to develop onshore concession blocks, Mangueira said. The state oil company Sonangol EP is pushing local companies to bid on 10 Kwanza basin concession blocks near Luanda and five in the Congo basin in the nation’s north when they are auctioned later this year. Onshore crude oil exploration and production is less expensive than the deepwater projects operated by companies including Total SA (FP), Exxon Mobil Corp. (XOM) and BP Plc. (BP/)
On April 8, Dos Santos’ cabinet, known as the Council of Ministers, began discussing how it will allow foreign investors to take profit out of the country without adversely affecting exchange rates, Mangueira said. The cabinet approved several laws to set up the legal, regulatory and technical framework for securities trading, he said.
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