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Investment Basics XLIV: Review of African stock markets

Author

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  • Mlambo, Chipo
  • Biekpe, Nicholas

Abstract

African stock markets have rapidly increased in number since 1989. This rapid increase came with the efforts to privatise state-owned enterprises. African markets are still young and segmented and lack contagion with global emerging markets. Expected returns are quite high on African stock markets making them attractive to international investors. However, African markets are also characterised by poor liquidity and market inefficiency. This, coupled with unfavourable laws and regulations, political instability, foreign exchange and convertibility risk, taxation, limited share acquisitions and restrictions on foreign portfolio investment have constrained the growth of these markets. Relaxing or eliminating investment restrictions will promote foreign portfolio investments resulting in improved liquidity and efficiency. This will give African stock markets increased growth potential and enhance their role in economic growth.

Suggested Citation

  • Mlambo, Chipo & Biekpe, Nicholas, 2001. "Investment Basics XLIV: Review of African stock markets," MPRA Paper 24973, University Library of Munich, Germany, revised Dec 2001.
  • Handle: RePEc:pra:mprapa:24973
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    File URL: https://mpra.ub.uni-muenchen.de/24973/1/MPRA_paper_24973.pdf
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    Cited by:

    1. Mlambo, Chipo & Biekpe, Nicholas, 2007. "The efficient market hypothesis: Evidence from ten African stock markets," MPRA Paper 25968, University Library of Munich, Germany, revised 2007.

    More about this item

    Keywords

    market efficiency; African stock markets; liquidity;

    JEL classification:

    • G1 - Financial Economics - - General Financial Markets
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions

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