Khartoum Stock Exchange in Sudan

KHARTOUM STOCK EXCHANGE AT THE END OF 1996 FINISHED ITS SECOND FULL YEAR OF TRADING CAPITALIZED AT $31.98 million. By December 31, 2004, KSE  aggregate share value had peaked at $1.47 billion. This represents a market capitalization increase of 91.2% from the close of 2003; though the total number of
listed concerns increased by 1, to 48, while five formerly listed stocks were dropped. In addition, there were 6 funds, as well as 42 editions of Government Investment Bonds (officially called Government Musharaka Certificates Shehama).

There is no doubt that the phenomenal performance of the telecommunications conglomerate,Sudatel, has contributed substantially to KSE’s aggregate share value growth; however,Sudatel’s share percentage of market capitalization has significantly decreased from 77% at the close of 2001 to 64.5% ($948.255 million) at the close of 2004. A $5.67 million capitalinfusioninto the merger of Blue Nile Bank and Mashreqbank– the largest United Arab Emirates privately owned bank boosted the banks’ market capitalization from $410,196 to $6.1 million.
There was, over the course of the year a significant [80%] appreciation in the share price of Export Development Bank, raising its market value from $4.895 million to $9.197 million–the dollar value increase is actually more than 80% owing to a 4% appreciation of the Sudanese Dinar against the US dollar.

Blue Nile Mushreqbank has the highest priced share on the exchange at SDD585,000 ($2,330), but there are only 8,207,325 shares comprising the $6.1m capital. Sudatel’s 46.2 million shares are the second highest priced on the exchange, closing 2004 at SDD5,150 ($20.52), followed at a distance by Sudanese Free Zones & Markets
Company at SDD3,691 ($14.70) and Omdurman National Bank at SDD 1,185 ($4.72).

Sudatel’s capitalization, which was $557.6 million at the end of 2003, increased by 60%, occasioned by a 25% increase in the number of subscribed shares and a 28.75% share price increase. However, prices were generally stable, apart from the four substantial gainers, but there was considerable re-capitalization, as well as mutual fund appreciation.

At the close of 2004, the six mutual funds in operation: (1) The Dollar Investment Fund, Nile Fund (2) Sudanese Shares Fund II (3) Joint Investment Fund (4) Various Investment Fund and (5) Development Fund are carryovers from the previous year, while (6) the Government Stock Investment Fund, which invests in government performing assets, was introduced in 2004. In addition, there are 42 editions of Government bonds (Musharaka Certificates),
which pay dividends on parastatal net income.

Up until 2001, the KSE had been essentially an issue and holding market, with little secondary market trading. As capitalization of the market increased from $237m in 1999 to $391.69m in 2000, the number of shares traded decreased from 198,569,203 to 14,169,188, the lowest quantity in the KSE’s 6-year history. This indicated buyers’ preference for solid equities and disinclination toward speculative trading. However, Sudatel, the highest priced share on the market, was also the most actively traded, registering 190 transactions, in which 1,404,195 shares
changed owners, compared to 120 transactions for runner-up Islamic Development Company, involving only 86,641 shares. Since the beginning of 2001, with settlement reduced to T+3,trade for profit margins on share price  luctuations has increased incredibly. During 2003, 9.745 billion shares were traded on the secondary market, in addition to 777,000 investment fund certificates and 37,071 bonds. Nonetheless, 18 of the listed companies experienced no trading activity. Shares traded during 2004 dropped to 2.1 billion, though the value increased from SD24.4 billion in 2003 to SD44.7 billion ($178.8million).

The aggregate value of Sudatel shares traded during 2004 exceeded $97 million in 1,064 deals– an average of just under $91,500 per transaction. On the other hand government bonds were traded on the secondary market to
the tune of $44.927 million, mostly comprised of 2003 and 2004 issues, with bond prices averaging about $830 and yields being paid either annually or semi-annually. More than half of the government bonds in circulation are held
by individuals, while companies and funds hold between 8-10% and banks about 18%. Bonds had become a major investment channel for banks, but the Bank of Sudan has curtailed excessive investment in them by imposing on
the banks a ceiling of 20% of total investments in order to avoid a dearth in private sector financing.

The only primary market issue by an established company during 2004 was a 10 million share tranche of Financial Investment Bank shares, valued at SD1 (about $0.04) each. Primary Market issues by newly listed companies
had an aggregate value of $105,278,884. The biggest single issue was from Al Salaam Bank, which offered 56,250,000 shares, valued at $103 million (SD25.840 billion). However, Al Salaam Bank is not included in the 2004 capitalization aggregates.

Since the Government Musharka Certificates were introduced in 1998, profits have fluctuated from a high of 33% per annual paid quarterly to 12%. The substantial [312%] increase in bank deposits held by parastatals is a good sign
for investors in GMCs.

KHARTOUM STOCK EXCHANGE MANAGEMENT

Khartoum Stock Exchange, located on the 5th floor of Al Baraka Bank Towers in the heart of Khartoum’s main business district (Souk Arabi), enjoys an independent legal status in accordance with the Khartoum Stock Exchange Act of 1994. KSE started primary market issues in October 1994 and, in January 1995, commenced full operations. The stock exchange is headed by a General Manager, who is presently Mr. Isam Elzein Elmahi, a Sudanese pioneer
in the capital market field. His principal management collaborator is the Economic Advisor, who is currently Prof. Ali Abdallah Ali. An entity styled the General Assembly of the Khartoum Stock Exchange is tantamount to a board of directors, while a Sharia Advisory Board provides technical assistance towards compliance with the guiding ethics. The exchange is audited by the government’s General Auditing Bureau.

In January 2003, KSE joined the Arab Monetary Fund database and the Arab Capital Markets. In 2003, the KSE Index was also introduced, which reflects on a daily basis the changes of traded share prices based on the average weight of the listed shares. Trading hours are from 9am to 11am Saturday through Thursday.

KSE had been receiving Ministry of Finance subventions up until the end of 2002. In 2003, its first year relying solely on its generated resources, KSE registered a net profit of $194,200, after covering operating expenses of
$326,000. That is to say KSE profitably managed an income of $521,300. The exchange closed the year with a net asset value of $400,000, including $230,000 in liquid assets.

The Legal Affairs Department of KSE manages off-floor trading transactions, which occur within families and include inheritances and transactions outside Sudan. The volume of such transactions was about $4m in 2003.