Naspers has a market capitalization of close to $100 billion, about 25% of the total value of the Johannesburg Stock Exchange (JSE), and more than 3x the value of the Nigerian Stock Exchange. But Naspers has more than $50 billion dissipation value since its $100 billion, in JSE, is way below its total market values in all its properties across the globe. For example, the market value of its Chinese super-app Tencent is $133 billion. Because of this weighting paralysis, Naspers has to leave Africa, to list in Europe.
In this Tekedia Daily, I explain why it is time for Africa to merge its major exchanges into one. Unless we do so, we will still remain playgrounds where the likes of Jumia, Transsion (makers of Tecno phones), will do business here and never list because they cannot simply do same.
- just seeing this. Most African countries still believe that stock exchanges are national champions and must remain so. We have failed to realize that globally stock exchanges are internationally oriented businesses and the international competition guarantees a race to the top. ICE group has stakes from NYSE to Euronext, and this enables it to retain the best businesses. Same with the LSE. The JSE, the KSE and the NSE sadly are still within their national silos and cannot be attractive (as a primary listing venue) to any top-rated investment grade issuer. Naspers is an investment grade business and it must seek an appropriate primary listing home. Even if we do not find the merger of exchanges option attractive, we can enter into strategic partnerships with advanced exchanges. For instance: to develop its derivatives exchange, Bursa Malaysia entered into a strategic partnership with the CME (giving CME 25% equity). Well, I don’t need to tell you how advanced BMD currently is, especially in relation to Islamic derivatives.
- A very brilliant idea. African countries should hurry up and stop dealing with the world as individual, subscale players. In this case, an African stock exchange will be better capitalised, structurally stronger and institutionally safer from sovereign risks. The EU already shows the benefits of pooled sovereignty and that it can work.
- The idea of merging major stock exchanges within Africa is one that really worth exploring, nothing really to lose, but certainly there’s so much to gain. Since it’s about markets, the framework can be pushed through AU with the currency of trade first denominated in dollars, until Africa agrees on single local currency. Most problems in Africa require scale and sizable capital to be able to confront them. The idea of individual countries looking towards China is not really a viable and sustainable solution, we need to reimagine and rethink a grand African Policy on economy.