four blank weeks on the Douala stock exchange

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The days go by and are almost all alike at the Central African Stock Exchange (Bvmac) based in Douala. When the market closed on June 13, no transaction was recorded. Whether stocks or bonds, not a single title was traded. However, demand and supply are not lacking. On the equity compartments, for example, the cumulative volume of securities requested reached 942, i.e. 664 for Socapalm, 228 for Safacam and 50 for the Société des Eaux Minérales du Cameroun (SEMC). The Regional and SIAT Gabon do not have any pending offers at the moment, on the contrary, 96 Cameroonian microfinance property titles are placed for sale. On the bond compartment, more than a million securities are waiting for takers. This is the case of the value “EOBDE 5.45% net 2020-2027” which holds the record for unexecuted orders with more than 930,000 shares placed for sale. This market physiognomy is, with a few exceptions, the same that has prevailed for 4 weeks. A situation that provides more information on the illiquidity of the sub-regional stock market. As of December 31, 2021, the Bvmac equity compartment posted an average liquidity ratio of 0.32% while that of bonds posted 0.6%. This remains very weak to make the CEMAC stock market attractive.

Also read: Bvmac: Alios Finance Cameroon repays more than 725.5 million on its 2021 loan

Liquidity contracts

In order to raise the level of weekly transactions, the board of directors of the Bvmac had, last February, decided to systematize, for the issuers of transferable securities, the obligation to sign a liquidity contract with a brokerage firm. In concrete terms, issuers requesting the admission of their securities to the coast had to make available to their brokerage firm a financial package and securities using as a base, the volume of the loan subscribed by the natural person investors. The rate was set at 2% and 0.5% of the base respectively for the amount in cash and the endowment in securities. Therefore, the brokerage firm was required to intervene on the Bvmac platform by “offering for sale or purchase and/or both, the security concerned when it finds that over a period of a week running from Monday to Friday, there was no exchange falling within the normal activity of the stock market on this title for which he provides contractual animation”. Only, 4 months after the entry into force of this decision, the effects are still slow to be felt and criticism is coming from everywhere. “It is nonsense to apply a liquidity contract to bond values. These are contracts linked to a duration, and which leave the quotation once the deadline has arrived. Those who hold them on principle keep them to collect the coupons. Historically, these are less liquid securities than shares on all markets in the world and which hardly fluctuate. We do not force a bond issuer to make animation” storms an intermediary of the financial market. Similarly, the reduction of the basic tax base to subscriptions by natural persons alone makes transactions difficult when it is known that their participation is not significant enough to really stimulate movement on the stock market; the market being dominated by institutional investors and banks.

Read also: Bvmac: Socapalm shares up 25% in the 1st quarter of 2022

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