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Forget the cross-listing pomp, it is but just that

Coffee!! At best, it is Nescafe, not Good African Coffee or Star Café. A tale of Ugandan Hotels. A tale for another day.


Here is the context. The Uganda Securities Exchange is vibrant, well, sometimes: Only on days when a company lists – locally – or cross-lists. The pomp there after glides away with limited activity except for companies like Umeme and Stanbic Bank. Uganda Clays used to be in that category, but it’s been unimpressive over the years for the reasons that are mostly copy and paste each year. Debt and low sales. This week, Uchumi one of the largest Supermarket chains in East Africa was cross-listed on the USE after the doing the same on Rwanda Securities Exchange (RSE). This is a “big company,” currently valued at US$70m. For the USE – without a CEO & acting CEO – this is much welcome boost, considering this will be one of its best performing year if numbers are anything to go by. Its market capitalization – in simpler terms, the value – will increase and the white boards will have one more ticker symbol: UCHM.

A cross listed company is ideally having a company floated on another stock market that is not its primary listing. The NSE – an exciting market & largest in EA – is Uchumi’s primary listing, and now the USE – located in an arcade along Kampala road – is its secondary listing. Ideally, this listing is a good move. On the first day, 9,000 shares are traded creating a turnover of Shs5.2m. If the momentum remained the same, then the USE would be an exciting place to hang-out. Well, this is not the case. Like they say – I do not remember who came up with the phrase – “numbers don’t lie” but sometimes can also be deceptive.

The USE has a total 8 cross-listed companies including Kenya Airways, Jubilee Insurance, Centum Investments – I believe one of EA’s best Investment companies -, EABL – I wonder why UBL, their subsidiary is not listed locally -, Equity Bank, KCB and now Uchumi. In the history of the USE, the highest or best trading year – 2010 – for cross-listed equities was when shares worth Shs4.6bn were traded. This was for EABL. EABL has also recorded the highest turnover of any cross-listed company. In 2011, Centum traded at least Shs3.6bn worth of shares, but it was in that same year that it cross-listed. Institutional investors gobbled up the shares. 

Picture from Daily Monitor 

UMEME is the only cross-listed company from Uganda on the NSE and it has only traded once – only 1,000 shares back in September. It made headlines, we were happy. I wrote this, “The challenge for Umeme now will be having enough liquidity to satisfy the demand in Nairobi – if they do get overwhelming demand.” These numbers are not the deceptive ones. Cross-listing simply doesn’t make sense, at face value so they will say. Again they will add, I am being too simplistic. “What does an award-less journalist know?” First, in my simplicity, why would I buy shares for a company listed in Kenya, yet I could just make a call to my Nairobi broker to get me some shares? Of course considering that brokerage firms here in Uganda are huffing and buffing, sometimes due to declining business. So just to support my Ugandans in order for them to earn commission of trades, I’d buy the shares. But “meh,” it is my money not theirs. 

The second issue is that cross-listed companies will come on day one and allocate shares to Ugandans. In fact Uchumi has lined up at least 265.4million shares for the USE but will there be demand? The boards will indicate blues and reds on the white board. I know, yes we still use these.  The blue marker is for bids and offers, whereas the red is mainly to indicate a done deal. After this “event” we’ll have some snacks, chat about the market and we’ll write all the lovely stories. The next few days, the counter name will fade or gather dust. Uchumi makes the claim that cross-listing will allow it raise money to expand. I laugh. Ideally cross-listing helps raise money. Investopedia reads: “Some of the advantages to cross-listing include having shares trade in multiple time zones and in multiple currencies. This gives issuing companies more liquidity and a greater ability to raise capital.” Our markets are not well developed. It is not our fault. People don’t understand.

Uchumi is planning a rights issue – shares given at a discount price to share holders in order to raise money. Did they need to cross-list to raise the money? Yes & No!!! Some Ugandan shareholders already owned part of the company after they used the NSE. Only demand will tell. But history tells us, the shares might not be gobbled up. 

Third is the small matter – read big matter – of transfer of shares through an electronic system. It worked for UMEME, then the USE CEO left, and now there’s information asymmetry. If the system worked, transfer of shares would be rapid, but if it doesn’t  then buying a cross-listed company from this market would be “erm” a nonstarter – again. 

But why do companies do it? Visibility is one. Uchumi, already a known company is not only a supermarket chain but is now listed in Kenya, Uganda and Rwanda. Investor confidence is up ahead of raising capital for expansion. And yes we are East Africa, a Community. Who wouldn’t want to be part of this? Since Uchumi is part of the USE, any developments make the headlines. Investors are happy. Money will be raised.
They will say this is simplistic, but that it what it is. I’m a journalist. I walk to the USE. The brokers will say, “owolugabo” has come. Cross-listing is an event. It should be more than just that but that is only if our markets become more integrated. Kenya, Rwanda and Uganda are not Tanzania. 


I like tea. Anytime is tea time. I sniff the leaves. The plantations have some great aroma. Kericho Gold – Kenyan made tea – is what I like. We have Ugandan tea. Its packaging is poor. It is ordinary. 

4 thoughts on “Forget the cross-listing pomp, it is but just that

  1. Correct, Mark! The business side of things is not being seriously addressed, unfortunately. Even the brokers who say ‘owolugambo’ are there for the show, turning up to justify receiving their end-month paychecks…

  2. ‘award-less journalist’ he he nice self assessment very funny
    On a serious note I am anti-CROSS LISTING and the only advantage to doing this is Public Relations (we are listed on 3 exchanges etc etc) as per what you write we are not in position geographically (time zones) and economically (shares for show) to access benefits of cross listing.
    In my days of engaging the USE i always shared that we need a single currency (like for the west African exchanges- and it can be for the stock markets alone) to sort that serious issue of currency variation- you know sometimes its illegal to trade a cross listed stock reason being the exchange rate (citi bank rates) puts it outside the trading range!!!
    Cross Listed are misleading to the market index- which shows market performance, am glad though now we also have a Primary listing index (before that a 1% fall in the EABL stock would lead to a 15% market fall in Uganda coz EABL has a huge market capitalisation then around 70%). Thats the same reason I would not want to see Tullow Oil cross listed (Instead list Tullow Oil Uganda Ltd). ehh by the way now the Kenyan cross listed company’s will account for atleast 95% of our USE market capitalisation don’t let the USE leadership boost aound on these deceptive numbers that count.
    Mark take heart atleast you could easily win award for the most Handsome journalist he he he hey but thanks for such deep pieces which a a breath of fresh air from the issued statements copy & paste Keep up the depth

    1. I think the companies that cross-list get better PR than our stock market does. As per the single currency, it comes in ten years. But my thinking is, the markets can be integrated better without even having a single currency just yet. All that needs to be done is to have the EA exchanges linked through an electronic system that allows easy movement of shares & allow active trading without necessarily waiting for shares to be available at the secondary market level. There’s a lot of work to do but how can such be delivered if talent, top talent is leaving the USE. That is very telling.

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