Wednesday, July 25, 2012

Is Bralirwa actually investable?

My last post on Bralirwa was met with enthusiasm then disappointment.  A few readers commented that the post was a tease and it is hard if not impossible to trade the stock.  I wanted to see how true their assertion was so I took it upon myself to do a little research.

The method I used to find a broker in Rwanda is no different than how I'd find a broker anywhere else in the world.  The technique is crude but works, I'm not original with the idea, I borrowed it from the book The World Is Your Oyster.  The book is about global investing with some reasons why to invest globally but mainly how to do it.  The book was written before American brokerage firms had the ability to trade internationally so trading in New Zealand meant calling New Zealand and opening an account.  The book is alright, I borrowed it from the library and read it in a few days, I'd recommend that.  If you want to read it I wouldn't recommend paying more than a few dollars for it used.

To find a Rwandan brokerage I went to the Rwanda Stock Exchange website and I surfed around until I found a page with the firms who have access listed.  I then emailed every single firm listed on the page asking if they would allow an American to open an account in local currency and if I could trade Bralirwa.  The next business day I had an email from Core Securities that it wouldn't be a problem at all.  All I had to do was fill out an account opening form, give them a copy of my passport, a signature, and a passport photo.  After that I could wire them the money and trade in Rwanda Franc any of the three stocks I wanted.  Of course there is some risk here, you're wiring money to someone in a country you've never met and who knows what safeguards or assurances exist.

I'm not actually going to open an account because while Bralirwa looks interesting it's also the first stock I've looked at in Africa.  But I did want to point out this isn't a fantasy trade.  I also know that institutional investors have access to the Africa market.  For most readers their primary broker might not have access but access can be gained through opening a new account.  An objection to this might be that investing globally in non-developed markets could result in a number of new brokerage accounts to hold one or two stocks.  Yes this is true, if you go this route the goal is to find a market with a lot of cross listings.  So in Africa, Kenya and Nigeria are markets containing a lot of cross listings. Opening an account in either Kenya or Nigeria might maximize the investable options in Africa.  Of course if your goal is to only trade Bralirwa then you'd need to have an account in Rwanda.

If anyone is actually interested in opening an account to trade this stock drop me an email at the link below and I'll pass along the firm contact and account opening instructions.

Talk to Nate

Disclosure: No positions

7 comments:

  1. Hi Nate,

    After your recent post I did a bit of Googling too, and came across this recent article from a champion of investment in Africa:

    http://investinginafrica.net/2012/04/how-to-invest-on-the-rwanda-stock-exchange/

    I've not tried opening an account myself, but maybe this will be helpful to any readers who want to try.

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    1. Thanks for that link, that website is excellent. He has done essentially what I mentioned above, opened accounts in many countries to invest. It's curious to note on his site he found many of these quickly growing companies trading for essentially liquidation value. Now I'm really intrigued.. I'm sure there'll be more Africa posts coming soon enough.

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  2. Thanks for the follow up. I really enjoy reading about this sort of thing. Keep up the good work!

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  3. Once thing thing keep in mind is the new FBAR filing requirements for foreign accounts and assets.

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    1. For US citizens yes there are requirements, I can't speak for readers who aren't in the US though.

      I believe there's a $10,000 reporting threshold in the US. So wiring $5k to Rwanda isn't an issue. I think the minimum is also an aggregate so $10,000 across all foreign accounts. The reporting isn't terrible, but just a pain. Nothing like the informal capital controls we live with.

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  4. Nate,

    This post (including the one before) was my favorite to date! Quite the enjoyable read. I am thoroughly impressed that you have a full-time job, a young family and still find the time to locate and analyze and discuss these "odd-ball" stocks.

    I disagree with the comment that a reader posted--"if you can't act on an idea it is not worth doing too much work on it". That misses the purpose of this very engaging blog. I think the title of the blog spells out exactly what the posts are about...oddballs. This also does not take into account timing. Today may not be the right time to invest, but that doesn’t mean it won’t be in 6mos, a year, etc.

    Thanks for the enjoyable writing, research and discussion.

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    1. Thanks for the kind comment. I do most of this nights and weekends, but I find it enjoyable so I don't look at it as work.

      Sometimes something that is uninvestable for one reader is easily accessed for another. I simply enjoy finding these stocks and highlighting them. Most of these companies won't appear on any other blogs, and there are so many interesting companies that aren't large cap household names, it seems like bringing a little attention to them is a good thing.

      The process of creating and opening an account in Africa is intriguing. I'm going to continue to look at stocks over there, I might have to open a small account just for the novelty of it. The downside is trades are expensive. The quotes I've seen from brokers are about 4% round trip on commissions, they're a fixed percentage set by the government.

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