BRVM Stock Exchange continues positive returns trajectory despite coups since late 2020
Trading activity, investor sentiments and positive returns by the Bourse Regionale des Valeurs Mobilieres Composite Index (BRVM-CI) have not been heavily impacted by the recent coups in the West African sub-region which has seen most of the recent spate of coups on the African Continent.
With the exception of the year 2020 where there was a general decline in the performance of the BRVM-CI (prior to the August 18, 2020 Coup in Mali) with the index falling from 156.59 points in January to 123.79 points in mid-October before rising to 128.18 points at end-October 2020, further continuing its positive returns to date.
Strong performance of listed equities from non-coup countries particularly Ivory Coast has largely lessened the likely adverse impact of the recent coups on the performance of the regional bourse.
Equities from coup-affected countries ie Mali, Burkina Faso and Niger form a minority (8.69%) of listed equities on the BRVM, hence its impact on the BRVM-CI performance is not significant.
However, equities from Ivory Coast form 69.56% of listed equities on the regional bourse, hence, in the event that there is a toppling of the current government, this is expected to negatively impact the performance of the regional bourse and cut short its positive returns trajectory since late 2020.
Beats GSE and NSE in dollar return terms
The year-to-date returns/gains recorded by the BRVM in local currency – West African CFA franc (XOF) – as at September 8, 2023, was 4.69%.
Local currency year-to-date returns as at September 8, 2023, by the stock exchange of the West African sub-region’s two biggest economies (Nigeria and Ghana) which are the NSE-ASI and GSE-CI are 32.96% and 25.69% respectively.
However, in terms of dollar returns, the BRVM outperformed the two stock exchanges recording 6.07% year-to-date returns as against the -20.31% and -2.46% year-to-date returns recorded by the NSE-ASI and GSE-CI due to weak local currencies (naira and cedi).
BRVM equities undervalued
Equities listed on the BRVM stock exchange are generally undervalued.
Data from the EquityRT platform indicates that price-to-book-value ratio (P/BV) of listed equities is averagely below 1, an indication that most equities on the regional bourse are undervalued, presenting a significant opportunity for value investors.
P/BV ratio of listed equities on the BRVM from 2020 to 2022 stood at 0.09 (2020), 0.12 (2021) and 0.13 (2022).
On the other hand, listed equities on the NSE and GSE are fairly priced with P/BV ratios slightly above 1.
P/BV ratios for listed equities on the NSE were 1.7 (2020), 1.6 (2021) and 1.9 (2022).
For listed equities on the GSE, it was 1.4 (2020), 1.25 (2021) and 1.4 (2022).
The impact of coup activities on the performance of the BRVM-CI from some member countries has been minimal because market capitalization and trading activity in listed companies from coup-affected member countries is not significant enough to dictate or influence the performance of the composite index of the BRVM.
