Choosing an Appropriate African Equity Index

Abstract

As African equity investing becomes more mainstream, investors are likely to gravitate toward an equity index family for benchmarking purposes. This article describes the challenges associated with adopting an African-based index. African equity markets are diverse and incorporate very different market capitalizations, sectors, and countries. In addition, the lack of liquidity in the various stock markets presents a large challenge. The authors conclude that as a result of the diverse methodologies, no single index truly captures the universe that investors are seeking.