Ding Ding Ding! ESX is Here!

Welcome to the latest edition of ፍራንክ Digest!

Your weekly brief on all things Finance and Investing. Quick, enjoyable reads for busy professionals in 5 minutes or less.

Here’s what’s coming your way:

• ⚡ BUZZ: It’s. Finally. Here!

• ⛽️ Tank Half Full: The Ripple Effect of Rising Fuel Costs

• 🗝️ The Key Takeaways

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The ESX: Ethiopia’s Late Gena Present?

Stock Market

Well well well, after much teasing and flirting, the Ethiopian Stock Exchange (ESX) has finally rung the bell.

Seriously, there’s an actual bell, at the stock exchange, on the trading floor…and it’s been rung. Just to clear up any hints of a euphemism (Which we tend to do here for our own amusement as much as yours 😉).

One of the reasons behind building the ፍራንክ Family was the anticipation of covering the Ethiopian Stock Exchange (ESX). 

Well in true Ethiopian fashion, they started late… የሀበሻ ቀጠሮ late.

Many suits and ties exchanged pleasantries and made wardrobe comments as they mingled before the inaugural ceremony. Fancy.

But in the grand scheme of things, this is huge! 

Some may feel as though the whole process has been rushed but if not now, then when?

The country is expected to register a growth of 8.45% according to government sources whereas the International Monetary Fund (IMF) suggests a slightly sober but still impressive 6.5% in the coming year.

Supporting this growth, amongst many other things are:

• A young population expected to come into the workforce 

• An uptick in Foreign Direct Investment (FDI) which is usually expected following a currency exchange float and economic liberalization (telecom & finance)

• Growing consumerism that’s going to spring up a plethora of companies intending to substitute imports and potentially help subside inflationary pressures over the long term

That’s all cute and all but how does all this connect to the stock market?

Well, you see, a market can only be successful if there is enough goods and services being exchanged between willing parties.

Think of the bustling corridors of Merkato, where Fast Moving Consumer Goods (FMCG) like electronics, soap, packaged juice and even ሜሪ’s hair extensions are common. People buy and sell constantly.

Manufacturers and traders are constantly looking for finances to meet the demand. And we know too well that financing from local banks are scarce or inaccessible due to excessive collateral requirements.

This is where Public Capital Markets like ESX come in handy by providing a dynamic and regulated funding source— by offering as little as 15% of equity up for trade to the public. Corporate Bond (or debenture) is another viable option and many Collective Investment Schemes could also be explored as we covered in recent weeks.

ESX’s significance is too early to judge but we’re hopeful that it also offers an opportunity for investors to get a slice of the action in various economic sectors. Not only wealthy individuals that already have their hands on delicious investments but also accessible to the everyday joe— Broad Investor Base. ESX defines this as citizens across the country, Ethiopian Diasporas as well as foreign investors. 

Undoubtedly, these elements just don’t fall from thin air, they are a result of an intertwined structure that involves certified professionals, capital mobilization and good governance to establish public trust, at the very least.

Amidst all of the excitement, Wegagen Bank S.C has officially been announced as the first company to list on the stock exchange. No details have been published yet so it’s not exactly the IPO fanfare that everyone was expecting but nevertheless, we have lift-off!

So what does this mean to you?

More opportunities to invest in diverse sectors of the economy and achieve your personal wealth ambitions (Money, Money, Money…Moneeeeyyyy 🎶). If you fancy owning some shares of Wegagen but can’t tell a broker from a barista, we’ve got you covered with the basics to get you started.

On a higher level, the stock market will create new jobs in the financial sector (Investment Bankers, Brokers, Equity Analysts etc) and across multiple sectors as Small & Medium Enterprises (SMEs) seize the opportunity to expand and reach “Large Corporate” status. While large ones go XL.

Whether you’re looking for a new career opportunity or just trying to channel your inner Warren Buffett, the timing of the ESX inauguration couldn’t have been any better.

Key Takeaways

1. Inauguration: Ethiopia launches its first stock market in decades after much delay

2. Projected economic growth: Encouraging signs of the future economic outlook of the country gives optimistic horizon to success of the newly established stock market  

3. Leading the way: Wegagen Bank becomes the first listed company on the exchange, overcoming the stringent ESX requirements to sell its shares on the exchange.

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