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Bloomberg

Ivory Coast Violence Drives Regional Stock Exchange to Mali

February 25, 2011, 10:04 AM EST

By Olivier Monnier and Jason McLure

(Updates with comment from analyst in third paragraph.)

Feb. 25 (Bloomberg) -- West Africa’s regional stock market, sub-Saharan Africa’s fifth-biggest by market value, will relocate “temporarily” to Bamako, Mali after its offices in Ivory Coast’s commercial capital, Abidjan, were seized by troops loyal to incumbent President Laurent Gbagbo.

The Bourse Regionale des Valeurs Mobilieres was taken over by security forces on Feb. 9. Today’s statement, which was e- mailed by the bourse, did not say when trading would restart.

The stop came as the country’s financial system ground to a halt last week, with at least 10 banks closing their branches amid the deepening political crisis that has left the world’s top cocoa producer with two rival administrations. Gbagbo refuses to cede power to Alassane Ouattara, the internationally recognized winner of a disputed Nov. 28 election.

The exchange has a market value of 3.5 trillion CFA francs ($7.3 billion), according to Johannesburg-based Securities Africa. France Telecom SA’s Senegalese unit, Sonatel, is the biggest company on the BRVM by market value, worth 1.6 trillion CFA francs. Eight banks, including Societe Generale SA’s Abidjan-based SGBCI unit and Ecobank Transnational Inc. are listed.

Violence in Abidjan and the closure of banks made it “impossible to perform any trades,” said Samir Gadio, a London-based emerging market analyst at Standard Bank Plc. “There was no other choice.”

As many as 315 people have been killed in post-election clashes, according to the United Nations. Pro-Ouattara protesters have clashed with security forces in several neighborhoods in Abidjan this week.

Logistics

The move will raise logistical challenges for the exchange, including the establishment of custodial accounts outside Ivory Coast that will be used for clearing trades and the installation of a computerized trading system in Mali, Gadio said by phone today.

Trading on the exchange will likely be limited to local investors while foreigners work to establish Malian bank accounts and other infrastructure necessary for conducting trades, said Dean Ginsberg, head of research for Securities Africa.

“Mali doesn’t have all the infrastructure for settlement and foreign exchange like the Ivory Coast,” he said by phone today. “The companies operating in Ivory Coast are not going to move to Bamako. There are a lot more questions than answers right now.” Ivorian companies dominate the listing, accounting for 33 of 39 companies, according to the bourse’s website. There are no Malian companies listed, it shows.

The ICX 10, a composite index of the 10 largest companies on the exchange, declined 1 percent to close at 184.33 on Feb. 11, the last day for which data is available. Since the beginning of the year, the index rose 0.7 percent.

--Editors: Emily Bowers, Philip Sanders, Ana Monteiro, Antony Sguazzin.

To contact the reporter on this story: Olivier Monnier in Abidjan via Accra at ebowers1@bloomberg.net; Jason McLure in Accra at jmclure@bloomberg.net

To contact the editor responsible for this story: Antony Sguazzin at asguazzin@bloomberg.net.

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