Download Mozambique Financial Market

Mozambique
Financial Market
4th European Financial Congress
Sopot - Poland
June 2014
Presentation Structure
I. About Mozambique
II. Economic Overview
III. Capital Markets Structure and Products
IV. Capital Market Performance
V. Capital Market: Challenges and Perspectives
About Mozambique
Geographic Location
and Language
•
Mozambique is located in the Southern Africa
•
Has an area of 799.380 Km2, of which
2.515 Km constitutes the Indian ocean
coast line
•
Language: Portuguese
•
Population: 23,5 millions
About Mozambique
Political &
Demographic Review
•
Mozambique follows a multi-party political system with general
election in every 5 years
•
After the 1992 Peace agreement that
marked the end of the civil war the
country has been enjoying a political stability
•
The democratic governance and the national
reconciliation have been contributing enjoy
a good business environment
•
As per the Global Peace Index of 2013,
the country was ranked at 48th position in
the world in terms of political stability
Presentation Structure
I. About Mozambique
II. Economic Overview
III. Capital Markets Structure and Products
IV. Market Segmentation and Performance
V. Capital Market: Challenges and Perspectives
Presentation Structure
Macroeconomic
environment and the
Basic Indicators
•
Mozambique has experienced in the last 10 years a robust economic
performance.
Nominal GDP (USD Millions)
Exchange Rate (USD/MZN)
GDP Real Growth (%)
Average annual Inflation (%)
2010
9.544,3
33,0
7,1%
12,4%
2011
12.533,9
29,1
7,3%
11,2%
2012
14.516,1
28,1
7,2%
2,1%
2013(est.)
15.369,7
30,5
7,0%
4,3%
•
The real gross domestic product (GDP) growth rate was 7% in 2013, falling
shy from the predicted 8.4% due to the floods that occurred in the beginning
of the year, though it is predicted to reach 8% by the end of 2014, keeping
Mozambique in the top 10 fastest growing economies in Africa.
•
This growth is driven mainly by the primary sector which was 10.4% with
major contribution from the extractive industry with 33%, followed by the
tertiary sector which was 8.6%, also driven by the transport and
communications with 15.5%.
Economic Overview
Macroeconomic
environment and the
Basic Indicators
•
The secondary sector also had a positive growth because of the
construction sector, contributing with 8.6% of the GDP;
•
Inflation rate also tend to remain below 10% in the coming years since it
dropped to one digit in 2012;
•
This is meanly due to the implementation of sound and prudent
macroeconomic policies, political stability and the structural reforms
being undertaken;
•
The agriculture is one of the major economic sector contributing to
around GDP with 20%. Others are industry trade and transports and
communications;
•
Mozambique grew at an average annual rate of 6%-8% in the decade
up to 2013, one of Africa's strongest performances;
Economic Overview
Macroeconomic
environment and the
Basic Indicators
(cont.)
•
The strong and sustained economic growth, has relationship
with natural resources, specifically coal, gas and aluminium.
Electricity, cotton, tobacco, and shrimp are also other
important export resources;
•
According to the World Bank, the emerging extractive industry
could provide the means for Mozambique to reach the status
of a middle-income country by 2025;
•
Additionally, it is expected that revenues from these vast
resources, including natural gas, coal, titanium and
hydroelectric capacity, could overtake donor assistance within
five years;
•
The government is now focusing on boosting the rest of the
economy.
Economic Overview
Macroeconomic
environment and the
Basic Indicators
(cont.)
•
Being a member of the Southern African Development
Community (SADC) and one of the signatories of the SADC
free trade protocol, together with the privileged geographical
location of the country, Mozambique is well placed in to further
economic development;
•
Though agriculture sector has been contributing to the
economy in the recent years in around 20% to 25% of the
GDP, in recent years sectors like mining and banking are
growing in a steady rate;
•
Foreign Direct Investment reached USD 5.9 billion in 2013;
•
International reserves increased by USD 404 million over the
year;
Economic Overview
Financial System
Structure in
Mozambique
Economic Overview
Macroeconomic
environment and the
Basic Indicators
(cont.)
Looking at the financial system as whole:
•
There are efforts by the government to make credit more accessible,
access to credit by the private sector and individuals remains difficult
and expensive;
•
Currently, interest rates for loans range between 17% and 22% per
annum;
However:
•
Despite the lack of depth in the financial industry, the financial sector
has been growing, and overall financial intermediation has deepened
as banks’ branch networks have expanded to sub-urban and rural
areas. There are currently 20 commercial banks, including 2 new
banks that came into the market through acquisition of already existing
banks.
Presentation Structure
I. About Mozambique
II. Economic Overview
III. Capital Markets Structure and Products
IV. Market Segmentation and Performance
V. Capital Market: Challenges and Perspectives
Capital Markets Structure and Products
The Mozambique
Stock Exchange
- Background
• Opening: October 1999
• Public entity under the umbrella of the Ministry of Finance
• Supervised by the Central Bank of Mozambique designated the
Capital Markets Authority
• Managed by a Board of Directors and an Audit Committee
• Responsible for the management of the secondary securities
market, and has sought, throughout its existence, to develop,
broaden, consolidate and empower the Mozambican capital
market on an on-going basis.
Capital Markets Structure and Products
The Mozambique
Stock Exchange
•
Objectives:
ü Diversify the existing financing alternatives;
- Market
Segmentation and
Products Treaded
ü Promotion of savings and its conversion into productive
investment.
•
Type of securities comprise of:
ü Shares and bonds issued by national or foreign entities;
ü Domestic and foreign public funds and similar securities;
ü Any other securities which by their nature and
characteristics, may be admitted to listing:
§
§
Commercial Paper
Participating Securities
Capital Markets Structure and Products
The Mozambique
Stock Exchange
-Key Milestones
Capital Markets Structure and Products
The Mozambique
Stock Exchange
-
Market
Share
and
Products Traded
Capital Markets Structure and Products
The Mozambique
Stock Exchange
•
- Autonomous
Services
Central Securities Depository:
•
Established in 2006;
•
To be operational in the beginning of the second semester of
2014;
•
Main Innovation: registration and centralization of listed and
non-listed securities in the country;
In this first stage it will work as a service provided by the
BVM, hence, also falling under the umbrella of the Central
Bank as the Capital Market’s supervisory authority;
•
•
In 2013, the BVM was designated the National Numbering
Agency of Mozambique;
Capital Markets Structure and Products
The Mozambique
Stock Exchange
- Major partnerships
and cooperation
• Multilateral Partners
•
•
•
•
•
•
ASEA – African Securities Exchanges Association;
CoSSE – Committee of SADC Stock Exchanges;
WFE – World Federation of Exchanges;
World Exchange Congress;
OIC Exchanges;
World Exchange Congress.
• Bilaterals Partners
•
•
•
•
SADC Stock Exchanges
Euronext Lisbon;
Comittee of Angola Capital Market;
Perspectives: London Stock Exchange, Brasil
(BMF&Bovespa), South Korea, Japan (Tokyo), Poland.
Capital Markets Structure and Products
The Commodities
Exchange
•
Established in 2012;
•
Main objectives: create a chain of products potentially tradable;
•
Assure food security in the country;
•
Improve the quality of commodities domestically produced;
•
Help in the price discovery process;
•
Diversification of markets.
Capital Market Performance
I. About Mozambique
II. Economic Overview
III. Capital Markets Structure and Products
IV. Capital Market Performance
V. Capital Market: Challenges and Perspectives
Capital Market Performance
Current market
Capitalization
Evolution
- Mozambique
(1999 – June 10th, 2014
Market Capitalization (1999 – June 10th, 2014)
(MZN Millions)
Capital Market Performance
Market Capitalization Dimension
Capital Markets Structure and Products
The Mozambique
Stock Exchange
- Market
Capitalization:
World versus
Emerging Markets
•
Market Capitalization: Global and Emerging Markets
Capital Market Performance
Market Capitalization
Dimension
Mozambique
Emerging Markets
World
(% of GDP)
Capital Market Performance
Potential Market
Capitalization Trend
Source: Global Finance Stability Report, April 2013
Presentation Structure
I. About Mozambique
II. Economic Overview
III. Capital Markets Structure and Products
IV. Capital Market Performance
V. Capital Market: Challenges and Perspectives
Capital Market: Challenges and Perspectives
Key Success Factors
and Challenges
•
•
•
•
•
•
•
•
•
•
Macroeconomic Stability;
Development of the Financial Sector;
Quality of the Institutions;
Protection of the Investors;
Automation of Financial and Banking processes;
Demutualization of organizations;
Companies Profitable Strategy;
Development of Regulation and Supervision of Financial
Market;
Interconnection of Regional Markets;
Attracting Investment by Institutional Investors and Foreign
Investors.
Capital Market: Challenges and Perspectives
Key Success Factors
and Challenges
(cont.)
Capital Market: Challenges and Perspectives
Key Success Factors
and Challenges
(cont.)
Capital Market: Challenges and Perspectives
Opportunities
Drivers
• In 2011 the Public-Private Partnership Law was approved by the
Government, and established that all megaprojects in
Mozambique should be listed at the Mozambique Stock Exchange
at least 5% to 20% of the shares;
• Mainly, these megaprojects shares are intended to be acquired by
Mozambican investors, looking for the empowerment of
Mozambican people;
• It is expected that by the end of 2014, a Brazilian mining
company, VALE Moçambique, will be the first megaproject
company to be listed at the Mozambique Stock Exchange with
10% of the capital shares, representing a market capitalization of
around USD 400 Millions.
Capital Market: Challenges and Perspectives
The Major Opportunities’ Drivers
Estimated growth of GDP and its Weight, 2013
4%
22%
24%
World
3.3%
3.4%
0.0%
1.9%
1.6% 8%
7.1%
3.1%
19%
8%
4%
3.4%
USA and Canada
Latin America and Caribbean
European Union
North Africa and Middle East
Sub-Saharian Africa
CEI
Asian Countries in development
Japan
Australia
5.6%
2%
GDP Growth
Weight in the World
GDP
3.0%
2%
In 2013, emerging markets, Sub-Saharian Africa in
particular, 5.6%, detach in the context of the the world
economic growth
Capital Market: Challenges and Perspectives
The Major
Opportunities’ Drivers
GDP Growth,
1992-2017
Capital Market: Challenges and Perspectives
The Major
Opportunities’ Drivers
- Potential
Sector Growth in
Africa,
2013-2015
(%)
Capital Market: Challenges and Perspectives
The Major
Opportunities’ Drivers
- Top 10
African destinations
with the IDE highest
growth, 2007-2012
THANK YOU !
4th European Financial Congress
Sopot - Poland
June 2014