Stock Markets in Africa - Uganda

In general when we talk about stock markets and market indices, we mainly talk about those belonging to the matured markets like USA, UK, Germany, France, Singapore and Dubai apart from those of China, India and to certain extent Australia. However there are still some more markets which are at the nascent and developing stages like those in Africa which may give good returns over the period.

One such market is located in Uganda. The Uganda Stock Exchange has started full fledged operations in a screen based environment recently. Though the exchange currently has only 7 stocks listed on it plus several cross listings from Nairobi Stock Exchange there is a good opportunity for its further growth with the creation of East African Trade Block consisting of Kenya, Uganda, Tanzania, Rwanda and Burundi. The stock markets are functional in Kenya, Uganda and Tanzania. There was one IPO so far from Rwanda and one more is expected during this year.

Though these markets appear to be very small compared to the major exchanges in the world, there is a lot of opportunity in these markets for gaining good profits compared to the major exchanges. For example if you take the Uganda stock exchange out of the seven stocks listed 2 have given bonus shares this year which is a good sign. The all share index rose from 1037 in June 2010 to 1194 as of now. The index has three banks, one insurance company, one news paper, British American Tobacco Uganda and one clay product company. Some of the shares though appear to be priced high value in local currency does not cost much in other currencies. Coming to the exchange risk part of investing the currency is currently in a weak position compared to a year back. However the currency is expected to strengthen in the coming months as the elections are over and also the expectation production of Oil in 2-3 years time. This is expected to strengthen the currency to a good extent in the coming years.

There is a good opportunity to invest in the stocks of this country for reaping good profits in the coming years.

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