Sudan bourse gets boost from Gulf Arab Investors

Reuters , Friday 13 Jul 2012

Sudan expects trading volumes to double this year because of the interest of Gulf Arab investors

Sudan bourse
Traders during the opening of the new electronic trading Khartoum Stock Exchange. (Photo: Reuters)

Sudan expects trading volumes on its small stock market to double this year because of the interest of Gulf Arab investors since it launched computer-based trading, the head of the Khartoum Stock Exchange said on Thursday.

In January, the Khartoum bourse set up, with Oman's help, an electronic trading system that ended the writing of bond and stock prices on white boards in a stuffy room in the heart of the Sudanese capital.

The new trade system has better linked the bourse, founded in 1995, to Gulf Arab bourses such as Dubai or Muscat.

The Arab African country is developing its stock market to attract more investment to help overcome a severe economic crisis that has triggered protests against high inflation.

Sudan lost most of its oil production when South Sudan became independent a year ago. Oil was the main earner of state revenues and foreign currency needed to fund imports.

Since the start of the computer bourse trading, volumes for shares and bonds have risen to 1.24 billion Sudanese pounds at the end of May, almost double year-on-year, general manager Osman Hamad Khair said.

"We are expecting trading volumes to at least double this year," he said in an interview, adding that 13 new firms had been listed since the launch of the new trading system, a record number. It had previously around 40 listed firms.


Investors from Gulf Arab countries such as Saudi Arabia and the United Arab Emirates were increasingly buying into government-issued Islamic bonds, known locally as "shahamas", as the bourse was now more accessible for outsiders, he said.

He said that Gulf investors now make up around 25 percent of trading, a number that was on the rise despite Sudan's economic woes with annual inflation hitting 37 percent in June - more than double the level a year ago.

Khair said risk-willing foreign investors were buying into shahamas, which make up 90 percent of trading, as the average return was between 18 percent and 20 percent, well above bond yields on other markets.

"They (shahamas) are guaranteed by the central bank," he said.

To reach more investors the stock exchange hopes to soon link trading systems with Cairo and other Arab bourses, Khair said. It already cooperates with UAE bourses in Abu Dhabi and Dubai as well as Muscat.

Most Western investors shun Sudan due to U.S. trade sanctions in place since 1997 over the country's role of hosting prominent Islamists in the past.

Transparency is also a big issue as regulation is only in the early stages. Two new bills to set up an independent bourse supervisor would be hopefully approved by the government and parliament within two months, Khair said.

"The ownership will transfer to a capital markets authority (from the finance ministry)," he said.

Khartoum's stock market is tiny with a market capitalisation of around 8.1 billion Sudanese pounds at the end of May. The biggest Arab bourse, Saudi Arabia, has a capitalisation of more than $300 billion.


In a second expansion step, Sudan hopes to set up next year with the help of India a trading platform for gold due to its rising importance for the economy, Khair said.

To compensate for the loss of oil revenues - following the country's split from oil-rich South Sudan - which previously made up 90 percent of exports, Sudan wants to expand the production of gold and other minerals as well as agricultural goods.

To encourage trade between local farmers and foreign buyers, Sudan also wants to set up electronic trading platforms for its main agricultural products, such as gum arabic and maize.

Despite Sudan's multiple economic and political woes, with insurgencies in several parts and tensions with South Sudan, Khartoum's main stock index has managed to stay stable this year.

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