Cheap Stocks May Boost West African Bourse After Rotten 2018

Cheap valuations on West Africa’s regional stock exchange are tipped to improve its attractiveness as strength in two of the continent’s fastest-growing economies helps spur a rebound from a record slump last year.

Stocks traded on the Bourse Regionale des Valeurs Mobilieres — an exchange covering seven Francophone countries and Guinea-Bissau — could be among Africa’s best performers in 2019, said Aly-Khan Satchu, chief executive officer of Nairobi-based Rich Management Group, an adviser to companies and wealthy individuals.

Before Tuesday, the BRVM Composite Share Index of 45 companies had gained 3.8 percent this year after plummeting by almost a third in 2018, its worst 12 months to date. Gross domestic product of the bloc’s two biggest economies, Ivory Coast and Senegal, is forecast to expand by more than 6 percent for a fifth straight year and support stronger company earnings in these markets, Satchu said by phone.

“The disconnect between the underlying GDP expansion and the performance of the stock market tells me that we’ve got to start narrowing that gap,” he said. “It’s fundamentally undervalued.”

Wireless operator Sonatel SA, which accounts for 40 percent of the index’s valuation, is the second-best performer in 2019, with gains of 25 percent. While the unit of Orange SA last week posted flat full-year earnings, it remains undervalued, said Kadi Fadika-Coulibaly, CEO of brokerage Hudson & Cie