NSX Paddling Through Global Financial Storm

Nov 06, 2009 (The Namibian/All Africa Global Media via COMTEX) -- LDNXF | Quote | Chart | News | PowerRating -- THE Namibian Stock Exchange (NSX) might get the help of the Financial Times and London Stock Exchange (FTSE) to limit the local bourse's over-exposure to certain listings in volatile times like the recent global financial crisis.

"Although it may appear as if Namibia has been protected, by its size and location, from some of the harsh global financial winds blowing presently, ... Namibia is certainly not immune to what happens in the rest of the world," former NXS Chairman Peter Koep said in exchange's latest financial report.

To illustrate his point, Koep referred to Anglo American plc and Old Mutual plc, international giants with primary listings on the London Stock Exchange (LSE), and dual listings on the Johannesburg Stock Exchange (JSE) and the NSX.

Comparing the Namibia dollar exchange rate to the free float of the two companies and the impact it had on the movement of the NSX Overall Index from December 2006 to March 2009, Koep said the index was protected when the capitalisations of Anglo and Old Mutual moved in opposite directions. However, Anglo has represented an average of about 50 per cent of the NSX free float during the period, and has varied between 62 per cent to 38 per cent, Koep said. "Because of the over-reliance on a single listing, the NSX is considering having FTSE develop a capped index for possible use by an Exchange Traded Fund," he said.

Koep said the NSX has shared in the strong global growth since 2003.

The Overall Price Index increased from 259 at the end of March 2003 to its peak of 1 034 on October 11 2007. Since then, however, the financial crisis has gobbled up most of these gains, and the Overall Price Index closed at 479 at the end of March this year.

"Up by 299 per cent to October 2007, down by 46 per cent since then, nevertheless resulting in a net gain of 85 per cent over the period," he said. During the six years, primary listings rose from 52 to 160, resulting in a 208 per cent gain, "albeit on a small free-float market capitalisation".

Koep described trading in 2008 as "volatile", with four months in the second half of the year exceeding N$1,2 billion each. Total trades for the year came in at N$9,132 billion, down from N$10,892 billion the previous year.

In the latest Financial Stability Report, the Bank of Namibia (BoN) said the Overall Price Index rose by 6,7 per cent to 593 in June this year from 556 points last December.

"The impact of the credit crisis, and the subsequent deepening economic recessions on the overall index, came through the JSE and mirrored the general downward trend in stock markets in the United States of America, Europe and Asia during the period," the BoN said.

Modest improvements in share prices resulted in an increase in the NSX Overall Index. According to the BoN, the total overall market capitalisation of the NSX rose to N$783 billion at the end of the first half of 2006, up 6,3 per cent from the fourth quarter of 2008.

Overall market capitalisation increased to nearly N$1 trillion last week with the listing of Bidvest Namibia, Extract Resources and Kalahari Minerals on the NSX.

"The increase in the overall market capitalisation is in line with the positive performance of global markets crisis," the BoN said.

The Local Index edged up 0,6 per cent from the fourth quarter of 2008 to close the first half of 2009 at 159 points. Local market capitalisation for the same period increased by 1,8 per cent to N$5,8 billion.

"The relative stability of the local market derived its insulation from the shocks emanating from the global markets affected by the financial crisis," the BoN said.

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