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Investing in Africa and the UAE: reading accounts differently
Currencies, accounting standards, liquidity and state-owned companies: what changes in emerging markets.
Standards and sources
Most companies listed in Johannesburg (JSE), Lagos (NGX), Casablanca, Nairobi, Abidjan (BRVM), Dubai (DFM) and Abu Dhabi (ADX) report under IFRS, as in Europe. Reports are filed with the exchange and often published on the company's website, sometimes several months later.
Currency changes everything
30% growth in naira or Egyptian pounds can be a decline in euros after a devaluation. Look at growth in local currency alongside the country's inflation. The UAE dirham has been pegged to the dollar since 1997, which removes that risk against the USD.
Liquidity and ownership
Many large companies are controlled by a state, a sovereign fund or a family, with a small free float. Health ratios remain valid, but the share price can move sharply on little volume.