The South Africa’s largest retail bank, according to a Bloomberg report may start the first gold- backed exchange-traded funds in Kenya and Nigeria.
“Absa Capital is in talks with the Nigerian Stock Exchange to potentially secondary list our NewGold exchange-traded fund,” Vladimir Nedelikovic, the Johannesburg-based investment bank’s principal for ETFs and index products, told Bloomberg. He is in Kenya to discuss starting the ETF in the East African nation, the report added.
The Interim Administrator of the Nigerian Stock Exchange (NSE), Mr. Emmanuel Ikazoboh, had recently said that a good number of the foreign investors he had spoken to were interested in returning to the market.
He said: ”A lot of foreign investors are now interested in our market. There is stability in the market. There are positive signals. The global crisis has created a situation whereby people are not willing to buy shares, but the market locally is showing positive signals.”
The NSE boss had in an interview with Reuters, stated its willingness to increase the limit on daily share price movement from five to 10 per cent.
Ikhazoboh noted that the trading hours might also be extended from two to three hours.NewGold, which has its main listing on South Africa’s JSE Ltd, is the largest gold ETF in Africa’s biggest economy, with more than $2 billion in assets.
Earlier this year, Absa Capital, listed NewGold on the Botswana Stock Exchange.
Absa, which is controlled by Barclays Plc, wants to expand in the continent to boost earnings. Absa Capital, which was launched in 2005 after the UK bank bought a stake in the lender, contributed more than one-fifth of Absa’s profit in the first half to June 2010.
In Nigeria, the NewGold ETF will develop the nation’s capital markets by improving liquidity on the bourse and bringing another asset class to the West African market, helping investors to “diversify their exposures,” Nedeljkovic said. “Our discussions with the NSE are in very early stages and we cannot provide any timing.”
ETFs trade like stocks, allowing investors access to commodities like gold and platinum without taking physical delivery of them, the report added.