Financial commentators frequently describe investing on frontier stock markets as “adventure capitalism.”
This is a particularly fitting characterization of the Ivory Coast-based Bourse Régionale des Valeurs Mobilières (BRVM). Few stock exchanges, after all, need to pack up and temporarily relocate to a neighboring country to avoid running street battles like the BRVM did last year.
But if “Danger” is your middle name this market may prove worth the risk. The market’s composite index lost 42% of its value in dollar terms over the past four years, and a sort of peace has returned to resource-rich Ivory Coast (Côte d’Ivoire). That sounds like ideal conditions for bargain-hunting to me.
Note, too, that the BRVM is not the exclusive domain of Ivorian stocks. It is very much a regional stock exchange. Companies from eight Francophone West African countries call the market home. So, if you’re looking for exposure to Benin, Burkina Faso, Guinea Bissau, Ivory Coast, Mali, Niger, Senegal, or Togo, the BRVM is the place to be.
I found two brokers to be particularly helpful and responsive when I asked them if they catered to foreign investors and, if so, how much they required in order to open an account. Both also maintain informative, English-language websites.
- SGI Hudson & Cie – Hudson is a favorite of many western institutional investors. They produce excellent research, which you can sign up to receive on their website. They do, however, require a rather steep $10,000 to fund a new account and a trade will cost 2.76% of the total trade value in commissions, fees, and taxes. Perhaps worth noting is the fact that they are based in Abidjan, the Ivorian capital. This is a real advantage when it comes to researching Ivorian stocks, which comprise the majority of the exchange. Their location could prove to be a liability, however, if violence should again bring Abidjan to a standstill.
- Impaxis Securities – Senegal-based Impaxis may not offer as complete research coverage, but their staff is customer service-oriented (they commit to answer all queries within 24 hours), and their commission structure is considerably more affordable than Hudson’s. A trade through Impaxis will cost 1.34% of the total trade value. They do not require a minimum balance to open an account.
Note that both Hudson and Impaxis will collect all your dividends and deposit them directly into your trading account. That’s pretty nice, because cashing a dividend check denominated in CFA Francs at your local bank branch is well-nigh impossible.
Both Hudson and Impaxis charge a quarterly custody fee in exchange for keeping their clients’ shares all safe and sound. Hudson’s quarterly rate is 0.000825% of total portfolio value, while Impaxis’ is 0.0005%.
Opening a BRVM Brokerage Account
Now let’s walk through the process of opening an account and buying your first shares.
Step 1: Complete the Customer Information Sheet
This account opening form typically requires disclosure of your passport number or other ID number, your address, and banking details. Here’s a sample from Impaxis.
Step 2: Complete the Custody Agreement
Completion of a form like this one will allow your broker to hold your shares in safekeeping for you.
Step 3: Provide a photocopy of the front and back of your driver’s license or passport.
Step 4. Mail original signed documentation to broker with photocopy of driver’s license or passport.
You may email photocopies of all documents to your broker to get a headstart on the account opening process, but they must eventually receive the original information sheet, custody agreement, and photocopy of the front and back of your identity document.
Step 5. Wire Funds to Your Brokerage Account
After opening your trading account, your broker will provide you with its bank details so that you can fund your account. The most efficient way to do this is via wire transfer. If you haven’t sent an international wire before, I suggest that you take your broker’s bank details to your local bank branch and ask them to walk you through the process. They’ll make sure that your funds arrive securely. Note that most US banks charge about $25 for outgoing international wires.
Step 6. Submit a Trade Order
You’ve done your research and found a stock that you’d like to buy. What now?
While some brokers will request a signed trade mandate form, for most brokers, all you need to do is send an email to your broker with your trade instructions. Keep in mind that some shares on the BRVM are rather illiquid, so I advise specifying a limit price for all of your orders. This will help you avoid paying significantly more for your shares than you had intended to pay.
Your broker will then execute your trade and send you a contract note that specifies the buy or sell price, commissions, and fees. Settlement of share trades takes three days on the BRVM, so if you’ve sold shares, don’t expect to receive the proceeds of a sale before then unless you’re willing to incur a penalty to settle the trade more quickly.
That’s it! Follow these steps and you’re a BRVM investor.
The process of opening a foreign brokerage account can be confusing. If you found this walk-thru to be clear as mud, please don’t be shy. Post your questions in the comments, and I’ll do my best to get answers for them.