The Citizen (Dar es Salaam)
26 December 2011
Dar es Salaam — It could be the worthiest of all firms listed at the Dar es Salaam Stock Exchange with a market value that is half the total capitalisation of the whole bourse, but African Barrick Gold is yet to sell a single share since it was cross-listed at the DSE more than two weeks ago.
The coming of ABG into the local stock market raised hopes of amongst Tanzanians of finally being able to own part of a true blue chip firm, but the hopes seem yet to be realised as ABG trading in Dar es Salaam seems to be marred by complications and bureaucratic mayhems.
According to information from the DSE management, AGB, which is listed at the London Stock Exchange, has not traded at the local bourse partly due to reluctance by London investors to sell shares to investors at the DSE and legal complications that make it expensive and time consuming for local investors to purchase the shares directly from the LSE.The DSE chief executive officer, Mr Gabriel Kitua, confirmed that ABG had not yet sold a single share at the DSE but said complication of selling shares of cross-listed firms were not limited to ABG.
The shares of other firms that cross-listed at the DSE mainly from the Nairobi Stock Exchange have also not been performing well.”The only cross-listed shares that were traded at the DSE were those of the NMG and it was because there were some local shareholders, who offloaded their shares at the DSE,” Mr Kitua told The Citizen at the weekend.
ABG, which is an offshoot of the Barrick Corporation, cross-listed on December 7, from the LSE at the share price of Sh13,160, which is the highest price of DSE’s history. ABG is the largest gold miner in Tanzania, owning four producing mines, including Tulawaka, Buzwagi, Bulyanhulu and North Mara.
According to information from ABG executives, about 10 Tanzanians bought shares at the Initial Public Offering that took place in London last year. Mr Kitua said factors such as exchange rate fluctuations, laws on capital expatriation as well as lack of a central shares repository hindered the selling of cross-listed shares.
Exchange rate fluctuations are an inhibiting factor because local investors have to change their cash to foreign currency to be able to buy shares from primary market. With the current volatility, investors fear exchange rate losses.
“It also takes more than a day to buy cross-listed shares from primary bourses because there is no automation. And at the age of electronic trading, this is more than investors can take. That is why they have decided to concentrate on locally listed shares,” Mr Kitua explained.
Tanzania has laws that limit the expatriation of profits gained from trading at the stock markets by non-residents. This puts off non-resident investors who would, otherwise be ready to off-load their shares from the London or Nairobi Stock Markets to investors at the DSE.
“It is no secret that these laws are not conducive for cross-listed shares because if non-resident investors came to sell their shares here (at DSE) they would not be able to take all their profits out,” Mr Kitua said.
Efforts to get ABG lead broker, Core Securities limited, to talk about the issue proved futile as its spokesperson was out of the country.
Mr Kitua said the long and expensive process makes it difficult for locals investors to access shares of the cross-listed firms unless shareholders of the firm sell their shares at the DSE.
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