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11 April 2024

Angolan Capital Markets: Trading on the BODIVA

Angolan legislation establishes that there are two types of regulated markets in the country: the stock exchange market and the organized over-the-counter (OTC) market. The stock exchange market is solely for the admission of securities for spot trading of shares, bonds, detached rights within the scope of public offerings and other rights such as commodities. As a result, all other financial instruments are excluded from the exchange, namely derivatives, even if represented by securities.   

BODIVA’s stock exchange market allows the trading of (1) treasury bonds and bills, (2) private bonds, (3) investment units (issued by collective investment undertakings, or OICs, such as investment funds) and (4) shares. On the other hand, organized OTC markets are regulated markets for the exchange of financial instruments that do not meet the criteria for admission to and trading on a stock exchange. 

In the case of BODIVA, there is (1) the securities transactions registration market (MROV), (2) the repurchase operations (Repos) market (MOR) and (3) the fractioned securities market (MVMF): 

  • The MROV allows for the registration of previously completed but unsettled trades in any form of security that are not admitted to trading in other BODIVA segments. Due to its less demanding admission requirements (relatively to the stock exchange market), the MROV is an excellent entry point to the securities market and may be used as a starting point for admission to the stock market. 
  • The MOR is intended exclusively for the trading and registration of Repos on securities authorized by the BODIVA. These operations include a repurchase agreement, where the seller of a certain asset commits to repurchase it at a future date plus the interest agreed between the parties. This interest represents the Repo rate. 
  • The MVMF is a market segment that results from the fraction or division of the quantities of an originating security admitted to trading on the BODIVA. Trading on the MVMF provides the following advantages: (1) easier access to the BODIVA, (2) minimum investment amount lower than the traditional one and (3) the possibility of splitting any security admitted to trading.

 We provide in this research note a detailed analysis of the trading figures provided by the BODIVA for the period 2022-23 in each of its regulated markets. Overall, the total amount traded on the Angolan exchange reached AKZ 7,657,442 million in 2023, a nearly fivefold increase from the previous year. This amount represented US$ 11,179 million (at the average US$/AKZ exchange rate of 685 for the period) and 12.0% of nominal GDP, which is significantly higher than the figure recorded in 2022 (2.9% of GDP). Most of the amount traded in 2023 was done through the OTC market (87.7%), which contrasts with what happened in the 2022 where 63.0% of the total was made through the stock exchange market.