How the FTSE/JSE All Africa Index performed in the face of COVID-19

In a recent interview with CNBC Africa, Mzwandile Riba, Head of Data Solutions at the JSE, provided insights into the FTSE/JSE All Africa Index. The index, which consists of the All Africa 40 and the All Africa 30 Ex-South Africa, features the top companies in Africa based on market capitalization, visibility, liquidity, and free flow requirements. Riba highlighted that the index is designed to represent the diverse economies of the continent, with a focus on countries like Kenya, Mauritius, Morocco, Nigeria, and Tunisia. One of the key points discussed in the interview was the performance of the index. Riba revealed that in dollar terms, the All Africa 30 has seen a 4% increase over the past year, while the All Africa 40 has experienced a 7.6% decrease. However, he also compared the index's performance with other providers such as MSCI and S&P, showing varying results over different time horizons. Another important aspect touched upon was liquidity. Riba acknowledged that maintaining a balance between representing the African equities market accurately and achieving adequate liquidity can be a challenge. With 54% of the All Africa 30 composed of financials and 26% of telecom companies, liquidity remains a concern for investors looking to track the index effectively. Riba also mentioned that while the index serves as an analytical tool for investors interested in African markets, it is not extensively tracked due to liquidity constraints. Portfolio managers use the index for analysis but may face difficulties in executing trades based on its composition. The interview concluded with a discussion on the index's credibility and the process of reviewing constituent membership. Riba confirmed that the index undergoes quarterly reviews with specific criteria for inclusion and exclusion based on market capitalization rankings. Overall, the interview shed light on the challenges and opportunities presented by the FTSE/JSE All Africa Index in the dynamic landscape of the African stock markets. As the continent continues its trajectory towards recovery post-COVID-19, the index remains a valuable tool for investors seeking exposure to Africa's growing economies.