What’s in the numbers: A look at the Lusaka Securities Exchange

In the next coming few weeks, I plan to do a series of posts specifically targeted at the Lusaka Securities Exchange (LuSE). Essentially, this idea came to mind after reading through this Bloomberg Markets article, which highlights historical equity market returns . One aspect that stands out from this article is that over the past 2 decades, emerging markets equities provided greater returns; both on a risk adjusted basis and in dollar terms.

And of focus here, the LuSE, ranks in the top 10 on both account of returns after converting to US dollars and on a risk adjusted basis. The table below shows the local bourse appearing twice in the top ten, twice  on number 2 in the year 2007 and 2011 only being edge out of the first spot by Mongolia on both occasions.

As this data from Bloomberg Markets  shows, emerging and frontier markets accounted for 9 spots out of a rank order of 10 in dollar terms and 7 spots on a risk adjusted basis.

Table 1.0

The following excerpt from Bloomberg stands out:

“The top 10 stock indexes that gave global investors the greatest returns in 2016 were all emerging or frontier markets, according to data compiled by Bloomberg. That’s not a fluke: over the past 20 years, nine out of 10 best-performing equity gauges have been in developing nations, the figures show”.

Investment theory contends that risk taken in an investment must commensurate the return sought. Though equities as a class of investible assets are by their very nature riskier assets relative to other assets like Treasury Bill or Bonds; this in essence frightens most investors to invest in them. More so from the view of the emerging markets, which expose investors to higher levels of volatility relative to more mature and developed markets. In my next post I will look at what was historically being  demanded by investors for taking up the extra risk posed by emerging markets.

The table below shows the top 10 market returns on a risk adjusted basis. No doubt emerging markets still dominated the list.

Table 2.0

What’s impressive from this table is that from the period 1997-2016, Zambia appears 5 times, occupying the first position once in the year 2013. The country appeared 4 within the top 5 spots in terms of risk adjusted equity returns in the world .In local currency terms this reflected an over 40% return as can be seen from figure 4.0 below. Going forward, investors can remain optimistic on the prospects of the emerging markets delivering stellar returns ahead of the developed markets pack. So far, the MSCI Emerging Markets Index has gained 2.7 percent in comparison with 1.5 percent from developed stock markets.

In Focus

The following charts give a snapshot of the performance of the Lusaka Securities  Exchange All Share index (LASI). For the monthly index data, the period covered is from January 2005 to December 2014. As for the yearly data, it goes all the way back to January 1997- December 2014. Furthermore, I present the data on both time intervals, inclusive and exclusive of the Zambia Consolidated Copper Mines Investment Holdings (ZCCM-IH). This is simply to highlight the effect that the company has on the market index as a whole and on the bigger side, the nation's economy.

NB: The returns are computed in the local currency (Kwacha).

Figure 1.0

Most noticeable from the above chart is the greater volatility experienced at the on set of the Global financial crisis. At the height of this crisis we see the index slumping close to -40.0%, conversely, also it hit a record high of more than 60.0% return. The index overall performance is an up-down swing with periods of decent returns and other periods of downward performance.

Monthly Returns Inclusive of ZCCM-IH

The following chart shows the LASI index inclusive of  ZCCM-IH. Since the LASI is a value weighted index, stocks having greater market value tend to have a much more pronounced effect on the movement in the index. For instance, factoring ZCCM-IH’s market capitalization into the LASI index has a telling effect on the overall picture of the index. The chart below shows volatility in certain months relatively lower compared to the chart above which excludes ZCCM-IH. My follow-up posts will closely evaluate this effect and try to elicit some information that explains why this is the case.

Figure 2.0

The last two charts detail the index on a yearly basis. Though unlike the picture painted from the monthly data, yearly data that goes farther down the years, seem to be carrying a different message on the effect of the company ZCCM-IH. When introduced into the computations, the volatility is more than that observed without its inclusion.

Figure 3.0

Inclusive of ZCCM-IH yearly LASI Index returns

Figure 4.0

Final Remarks

It’s with no doubt the Emerging Markets had a stellar performance the past 2 decades. But what remains inherently  attached with these developing markets is: (i.) lack of proper oversight on market monitoring and supervision; (ii.) the lack of or inadequate liquidity in the market among other challenges.

In the coming posts I hope to dwell more on the performance of the LuSE and have a look at its peer exchanges in the region.

P.S: I used R statistical Computing Language for my analysis. For the data and the code,you can find them on my GitHub account. Do check them out and run your own analysis.

Folly of the Educated

If you thought the  right to education is indelible, wait until you experience the Zambian education system. The announcement made by the Hon. Minister of Education,  Micheal Kaingu, about the givernment's decision to discontinue  paying  meal allowances to students on government bursary, not only is it a sad turn of events  but highly unreasonable.

Many of the men and women sitting on the other side of the table who consented to this decision were direct beneficiaries of government financial support programmes during their time at university. To later turn-around and want to rob others of the same opportunity that made you who you are today is unfortunate.

It is easier to wake up and make haste decisions minus much thought on the multiplier effect of that decision and another to experience the resultant  effects  of the decision.This decision not only affect the students directly but other members of their families as well, who will have to put up with austerity measures in their homes so they can raise funds to feed their child at university.In addition, Many of the beneficiaries from the government bursaries at both Unza and CBU come from poor backgrounds, the financial support received becomes their only chance to acquiring a tertiary education. As though it couldn't come at the worst time, a time where the poverty levels have soared, unemployment levels are heading  for the sky and even those who work and earn something this will be a challenge bearing in mind the prevailing high costs of living.
One may wonder what's the logic of paying the school fees but you can't  be given the means to survive? Because for most not even meal allowance can be afforded by their parents.

Or maybe this comes as a punishment for the unruly behaviour of the students whenever they are aggrieved?
I have always been against riotous behaviour  when ever you want your plight to be heard by concerned parties,  unfortunately  this has not always been the case with our public universities. Destructive behaviour  at our institutions of higher has been the norm since time in memorial. But this shouldn't  be a case at an institution of high learning. The lecture  halls should house intellectuals and not being turned into "Theatres of Thugs" lest society loses faith in the intellectuals who are expected to be the face of good leadership, role models to inspire the generation's to come.

But honestly!, how do you expect a student coming from a poor background watching all the oppulence exhibited by our leaders and being told his/her issues rank least on the priority order expected to behave?  Should they fold hands and watch their resources being  plundered by the leaders? Unfortunate the situations maybe but destructive behaviour shouldn't even be considered an answer.

We now live in a country where education, health and other social amenities are of least concern for the leaders.  Luxurious cars and moving in gulf stream jets seem the new norm. But how do we expect sustained development if we can't educate  the citizens? The argument that government is not responsible for everything and education in particular does not hold water if the leaders can plunder national resources to their benefit and self -enrichment.  Millions have been wasted on bye-elections, political expedient projects and more and more of the money which should be educating the masses now  sits comfortably in individual hands. Such greed is bad and inhumane.

But forget it, they would rather remove the meal allowances and close the universities when ever it's convenient for them since in the first place their children have a birth right to be educated abroad. The same applies to health, how do you expect good health facilities locally when all the privileged do is head to Milpark hospital  in SA?.

This country presents a great case study of 'schooled illitrates', with piles and piles of policy documents and pronouncements but no tangible action on the ground. Now they want to kill the little hope remaining to educate citizens.

The Dark Side of Self-valuation: Seeking Intrinsic Value from what you cannot control

"I don't like how other people perceive me"-Too often that is heard from a lot of people. It is quite an overwhelming challenge to suit  other people's sieving threshold of what is 'acceptable' or what is to be categorized as the perfect traits. But to be seen to be self-worth and deserving of every respect as a person, the ultimate onus falls on you as an individual to find your value and appraise  our self- worth.

 In my attempt to tackle this topic I will give  the following 4 points to try and avoid if you are to build your self-worth and be the driver of you self-value- give no chance to other people and /or situations to appraise your worth and determine your shelf value!

1. Distinguish Reality from fantasy- it is one thing to dream, and to have realistic dreams. Fantasy and reality have always been distant cousins, therefore see them as such. Embracing fantasy has a dent on your view to been self as self-worth. It is of no use to to self-value yourself  with unrealistic means as a yardstick of whether you match up to other people within your community. 

2. Living another person's life- We live in times of social networks and a much open global village thanks to the power of the internet. An incredible invention and a great tool to catch up with family, colleagues and peers we would have not meet or talked to in ages. But on top of it you see too often people who are living a life that isn't theirs- in short wrapped in fantasy. Why is this the case? Many people have chosen to live another person's borrowed life, this is true not only in the social media realm but even in the day-to-day ordinary life. The self-validation you will get is that which is not only artificial but it results in unnecessary stress to always put up the perfect act to be seen to be self-worth or convince yourself you are worth your imaginary life. Self-value comes from being true to yourself in every aspect of your life. Life is too such being a slave of another person's script; write your own script  and be the  director of its course.

  

3. Stop comparing yourself to others- just like living another person's life avoid comparing yourself to what others have or are in order to convince yourself of your self-worth. Ironically, despite our differences in education, social or economic standing, one thing remains is that we are all gifted and talented in our different and unique ways. Just because you are not as intellectually astute as the next person to you that doesn't mean you cannot not see yourself as self-worth of pursuing your life aspirations.Basing your reasons of not pursuing something as a result of what others have against you is not only suicidal to your conscience but detrimental to your progress. Instead of comparing yourself to others, as a first step you can start challenging yourself against the best. 

4. Avoid hearsay from other people- Never allow hearsay as a basis to self- value your abilities. You can never grow as a person if everybody's opinion became an input in building your self-worth. Just what others perceive you are their opinions/ view and not yours, let it to themselves as such.

There is always  a dark side to finding self-value if you try to let external factor to primarily become the building blocks to self-worth. Inner freedom must be embraced more than the external factors.

How to Overcome Setbacks: Lessons and Principles to be Mastered.

Often as is the situation as human beings we fail once or even a couple of times in the course of life towards our pursuit of our goals. This does not reflect weakness or being unlucky, but as is the case human beings are prone and bound to fail. How this comes about can be attributed to many factors some within the control of an individual and other totally outside the realm of control of that person.

As is the case with almost all setbacks they evoke a sense of doubt over a person's abilities. Ultimately how a person overcomes setbacks becomes the differentiating factor between  those that fail miserably  and those that recover from a faced setback, recovering with a new found impetus and forging forward with unrelenting conviction for future opportunities. This famous adage fits in here perfectly: " A problem only becomes a problem if you see it as one".  Simple as this reads, it highlights one key  aspect  and that which is  'attitude'.The problem itself  may not have  aggravating repercussions or the setback my not be that bad but the attitude taken in looking at such a setback may ultimately  dictate a wrong outlook such setback.

As you read this you may start  to doubt your own strengths, you must be through the rhetoric's of how easy words seem to portray overcoming setbacks. Truth be told it's never easy and neither has ever been easy overcoming setbacks.  Its hard to come to terms  when you miserably fail to attain you desired goals or when the people you had entrusted them to have your  back lamentably leave you to hang. it's heart breaking  when you loose everything you had invested your sweat and tears  at the blow of wind. But over all this the denial or reluctance to forge ahead becomes the ultimate loss. Wayne Gretzky once famously remarked, " you miss 100% of the shots that you don't take".

Below I give (4) points to embrace on your journey overcome setbacks  which personally  I have religious upheld:

I)  Attitude- Your attitude towards setbacks has profound effect whether you become a failure or a resurgent warrior.  A positive  attitude goes a long way in the process of overcoming a setback. A matter of fact it's the first aspect one must address in the process of. Overcoming setbacks. It's only with attitude change that you can make a clearly conscious and the conviction that mediocrity isn't your portion. Failure becomes failure if you decide to see it as one. Always remember there is no such thing as 'failure' but only opportunities to learn. And always remember with life class is always in session, henceforth we are all learning.

Anthony  Robbins said, " you see, in life, lots of people know what to do,but few people actually do what they know. knowing is not enough! You must take action. And the action phase begins attitude change towards how you look at setbacks.

II) Commitment- The change in attitude should be reflected in the commitment you attach to whatever you endeavor to achieve. This should be seen in the tenacity in approaching every challenged faced.

III) Self-belief-  You can only posses unrelenting commitment if you believe in your strengths, skills and capabilities. They is a saying which goes like: "if you believe in yourself and in your talents other things will follow". self-belief is as pertinent as it's essential  a recipe to overcoming setbacks.

IV) Take chances- Never be afraid to take chances. No matter how insurmountable some challenges may seem at face value, possess the self-belief and go for it, Mandela said it best, " it's always impossible until its done". Therefore never discount your abilities before you actually give it a try. You would rather try and fail in your quest to learn something new than not try at all because at the end of the day you will discover skills, strengths you thought you didn't possess.
Never cease to dream!!!!

To be continued....