Category Archives: Concepts of Africa & Investing

Trump’s Policies Can’t Stop Africa’s Fastest-Growing Economies

trump-speaking

 

 

 

 

Although we don’t know the full extent of President-Elect of the United States Donald J. Trump’s economic policies, but there are existing “forces” out there that preclude him and his policies from stopping Africa’s growth.

“…there is cause for hope for investors with international assets, especially those invested in emerging markets. Developing economies, on the whole, are in a better position to weather uncertainty than even a few years ago. Economic and monetary policies are very orthodox, and this has been paying off. Inflation is largely under control or falling. Currency weakness may slow but should not prevent central banks from cutting interest rates to support growth. At the corporate level, there are signs that the earnings cycle is turning for the better.”

It seems to be that if the U.S. decides to isolate itself from the rest of the world and its economies (which probably won’t happen), the emerging economies of Africa and other countries will keep on growing due to their own “intrinsic”, unique and endemic forces.

“Despite everything that is going on in the U.S., emerging markets remain regions of unprecedented wealth creation where the scope of economic activity has yet to be fully reflected in stock market capitalization. Growing middle classes in many emerging economies are driving demand for everything from milk powder to cars. These regions will likely grow faster than the developed world for years to come. Unlike the financial markets or even changes in political climate, this is structural, not cyclical. Trump’s policies may close the U.S. off to international trade with some emerging countries, but such policies may do little to prevent the persistent growth of these emerging economies.”

 

African Investment Report will continue to search out opportunities for investing in Africa’s growth. Be sure to subscribe on this page and get our FREE report and updates!

 

“Trump’s policies can’t stop the fastest growing economies”: http://thinkingaloud.aberdeen-asset.us/en/thinkingaloudus/the-bigger-picture/trumps-policies-cant-stop-the-fastest-growing#utm_medium=social&utm_source=twitter&utm_campaign=thinking%20aloud content marketing_united states_english&utm_content=soc_socialpost

Trump and Africa, and What It Could Mean for Investors

trumpMany are saying that the President-Elect of the United States, Donald J. Trump, may not care about Africa, but some are saying that may be a good thing.

“Despite all this, it’s worth remembering uncertainty isn’t all just about downside. Less trade with the US could force African countries to put more effort into developing stronger trade links with each other. Intra-Africa trade is still a small share of trade for many African countries. And young Africans dissuaded from moving to the US comes with one potential advantage: decades of brain drain can be stalled and Africa’s brightest can focus on problems at home.”

So there may be certain companies, particularly in South Africa, that could take advantage of intra-Africa trade.  Meanwhile, however, there is a lot of downward pressure on the rand, making many South African companies less attractive, at least in the short term.  There are going to be more opportunities, however, with U.S. and European companies that are strong plays on Africa.

Furthermore:

“The unpredictability of a Trump presidency will create new types of opportunities for Africa and Africans. We may not know what they are yet, but we won’t know if we’re not looking.”

 

African Investment Report will continue to search out opportunities for investing in Africa’s growth. Be sure to subscribe on this page and get our FREE report and updates!

 

“It might not be the end of the world if Africa drops off Donald Trump’s map”: http://qz.com/836048/donald-trump-doesnt-care-much-about-africa-that-may-be-a-good-thing/

Reasons to Keep Buying Emerging Market Stocks for the Long Term

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Some U.S. Trust analysts are bullish on emerging markets, which includes South Africa.  One of the 5 reasons they give is the growth in consumer spending.

“…we still see considerable scope for growth in emerging world consumer spending. Emerging economies account for 85% of the global population, but just under 40% of global household spending. And key consumer segments remain significantly underpenetrated. Mobile broadband subscriptions, for example, stand at just 35% in the emerging world, compared to 87% in developed markets. China surpassed the U.S. to become the world’s largest car market in 2009, but its auto penetration rate is still much lower. And as calorie intake increases, obesity rates rise and sedentary work becomes more widespread, healthcare spending is another areas where we see considerable room for gains in EM consumer outlays.”

Another reason is the change in the EM benchmark.

… Since the financial crisis, the EM benchmark has undergone a major shift away from industrial and commodity-related sectors toward more consumption-linked sectors… As a result, EM equities are now far more closely geared toward the growth areas of the future.”

Other reasons, such as attractive valuations, U.S. and emerging market business cycles having further to run and Fed rate hikes not affecting emerging markets round out the 5.

African Investment Report will continue to search out opportunities for investing in Africa’s growth. Be sure to subscribe on this page and get our FREE report and updates!

 

“5 Reasons to Keep Buying Emerging Market Equities”: http://blogs.barrons.com/emergingmarketsdaily/2016/10/26/5-reasons-to-keep-buying-emerging-market-equities/

 

 

Goldman Sachs on Africa’s Risks vs. Rewards

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Colin Coleman, Goldman Sachs’ managing director for sub-Saharan Africa, thinks that despite some tough times and risks ahead, long-term prospects are optimistic:

“Despite the challenges that emerging markets have faced recently, Coleman thinks that global sentiment is improving, with Brazil forecast to come out of the recession next year and China and India emerging as ‘bright spots’.

So how does Africa compare in this global context? For investors with a long-term approach, the continent’s large, rapidly growing, under-serviced consumer base is still an attractive option. However, slow growth combined with high risk remains a deterrent.”

He is especially optimistic about East Africa (particularly Kenya and Rwanda”) and South Africa:

“‘One area of optimism on the continent is east Africa. The region has managed to escape some of the knock-on effects of lower commodity prices seen in west Africa, with countries such as Kenya and Rwanda focusing on improving their business environments.

In east Africa we are seeing quite a lot of growth… and I hear very good things about the east African experience from many companies,’ said Coleman.”

“…(South Africa’s) strong institutions are something to feel optimistic about, noted Coleman.
He highlighted that relatively “muted response” on the rand exchange rate after last week’s
events as an example of this.
So actually this tells you quite a bit about the progress that we are making in terms of this
democracy sustaining. I would say this year has been a very evidential demonstration of the
strength of all of our institutions, the constitutional chapter nine, the public prosecutor, the
ability of the IEC to run a good election… the absolute strength of the independence of the
reserve bank… and the strength of the business community and liquidity of markets which
have continued in the face of these things.”
 

African Investment Report will continue to search out opportunities for investing in Africa’s growth. Be sure to subscribe on this page and get our FREE report and updates!

“Goldman Sachs on whether Africa’s risks are worth the rewards”: http://www.howwemadeitinafrica.com/goldman-sachs-whether-africas-risks-worth-rewards/56354/

Why South Africa Could Be a Country for You to Buy Into For Your Portfolio

brics-logo   HSBC’s emerging market researchers and strategists recommend South Africa as one of the countries to buy into.

“Among the BRICS, the only country they rate overweight is Russia. They also have an overweight on Turkey, South Africa, the Philippines, Peru, Indonesia and Hungary.”

(Actually, South Africa is one of the BRICS – that’s what the “S” stands for!)

But they are overweight on South Africa, meaning that they think that buying stocks of companies in, or foreign stocks (U.S. and European, etc.) that are plays on, South Africa would be a better buy, relative to many other countries that are neutral or underweight.

African Investment Report will continue to search out these types of companies. Be sure to subscribe on this page and get our FREE report and updates!

 

“8 Reasons to Buy Emerging Markets”: http://blogs.barrons.com/emergingmarketsdaily/2016/10/12/8-reasons-to-buy-emerging-markets/

 

Sub-Saharan African Growth Slumping? So Says World Bank

lion-1551759_960_720   The World Bank has cut their prediction for sub-Saharan Africa for 2016 to 1.6%.

“The disappointing rate of economic expansion is well below the global average of 2.3%, the World Bank said in its twice-annual “Africa’s Pulse” report.

Just in April, the World Bank publication had seen growth in sub-Saharan Africa reaching 3.2% this year, but the slide in the region’s two biggest economies, Nigeria and South Africa, as well as other oil and commodity exporters, has been steeper than anticipated.”

They don’t sound very confident about the future, either:

“The report saw the region growing by 2.9% next year—still below the 3% expansion rate of 2015—but warned that “the balance of risks… remains heavily tilted to the downside.”

This means that even that 2.9% growth projection for 2017 could be optimistic as low oil and commodity prices could persist.”

Okay, so we really have to look for the “bargains”!

And wasn’t it Warren Buffett who said, “Be fearful when others are greedy and greedy when others are fearful.”? Just sayin’…

African Investment Report will continue to search out these types of companies. Be sure to subscribe on this page and get our FREE report!

 

“Sub-Saharan African Growth Slumps Says World Bank”: http://www.wsj.com/articles/sub-saharan-african-growth-slumps-says-world-bank-1475148609

 

The Emerging Markets’ Rise Can Keep Going

johannesburg central business district   The emerging markets have had a history of still rising for quite some time after a surge, and some think that the conditions for a long-lasting one are even more favorable than before:

“Calamos is “more positive” on emerging markets than it has been “for some time,” Speed tellsBarron’s, because earnings and business activity are improving, currencies and commodities are stabilizing, fragile countries’ external vulnerabilities have moderated, and the Fed is being deliberate in raising rates. Also, emerging market valuations remain attractive compared to developed markets’.”

Some managers recommend “plays” using multinationals in the developed markets, as we have been recommended previously:

“The managers like tech and consumer plays that benefit from an expanding emerging market middle class, and they also own developed market companies with emerging market exposure such as oil giant Royal Dutch Shell (RDSA).”

And they are adding a South African company to their portfolio:

“…South Africa miner AngloGold Ashanti (AU).”

Find out where we’re going with these Africa investment ideas and concepts by signing up for our free newsletter! Sign up in the box to the right, and as a gift for doing so, get our FREE report: “How to Profit From Africa’s Growth Without Leaving Home”. So what are you waiting for?  Do it right now!

“Why the EM’s Rise Can Last”: http://www.barrons.com/articles/why-the-ems-rise-can-last-1471670364

 

Finding Trends in Africa Can Help You to Weather Volatility

ocean waves in Africa   Here at the Africa Investment Report, we always talk about investing for the long term; not the short term.  Investing is for the long term, and trading is for the short term.  This publication is focused on investing.

One of the things to be mindful of when investing for the long term is to find long-term trends that can sustain your investment through volatility from economic or political “influences”, for example:

“One way to address the short-term volatility associated with emerging markets is by investing alongside secular and demographic trends. These multi-year and multi-decade influences can provide long-term resilience in the face of volatility resulting from more temporary influences, such as quarterly fluctuations in gross domestic product or election results. Trends related to infrastructure and middle-class consumption in the emerging markets are two generally better known secular forces supporting emerging-market opportunities, but there are a number of lesser known but compelling trends that provide growth opportunities.

There are even multinational companies that are finding opportunities due to long-term trends in Africa:

“Evolving emerging-market demographics and consumer preferences provide long-term growth potential for companies all over the world. For example, both multinational and emerging-market domiciled companies are answering the growing demand for hospital procedures, pharmaceuticals, and cosmetic goods and services.”

Find out where we’re going with these Africa investment ideas and concepts by signing up for our free newsletter! Sign up in the box to the right, and as a gift for doing so, get our FREE report: “How to Profit From Africa’s Growth Without Leaving Home”. So what are you waiting for?  Do it right now!

“Health and longevity trends show promise”: http://www.investmentnews.com/article/20160821/FREE/160819913/health-and-longevity-trends-show-promise

Why Emerging Market Stocks Like South Africa (and Nigeria) Could Rise

nigerian stock exchange building   The financial institution BlackRock is saying that emerging markets stocks can rise (even further).

“Global chief investment Strategist Richard Turnill explains 3 likely outcomes that motivated BlackRock to upgrade emerging market equities to overweight:

  1. Global growth expectations pick up and interest rates stay low.
  2. Federal Reserve officials appear split on policy direction. LIBOR hit seven-year highs ahead of U.S. money market reforms.
  3. Fed Chair Janet Yellen may shed light on future policy moves in a speech [Friday] at the central bank’s annual Jackson Hole meeting.”

“EM equities are trading at a 24% discount to global developed markets on forward earnings multiples. Fundamentals could further improve, we believe, as EM companies focus on controlling expenses and targeting profits over market share gains.”

“Within EM equities we prefer countries showing economic improvements or having clear reform catalysts, including India and ASEAN countries.”

With the devaluation of the naira and other factors, Nigeria could be moving in this direction, and so could South Africa.

Find out where we’re going with these Africa investment ideas and concepts by signing up for our free newsletter! Sign up in the box to the right, and as a gift for doing so, get our FREE report: “How to Profit From Africa’s Growth Without Leaving Home”. So what are you waiting for?  Do it right now!

“3 Reasons Emerging Market Stocks Can Rise: BlackRock”: http://blogs.barrons.com/emergingmarketsdaily/2016/08/22/3-reasons-emerging-market-stocks-can-rise-blackrock/

How Will Recent South Africa Elections Have an Impact on Its Economy?

children-200066_1280   As a result of last week’s local elections, the reigning ANC party lost some key seats and power in the major cities, and this is likely to affect the economy, but as to how, some experts are not sure:

“Moody’s rates the country’s debt at Baa2 negative, but writes that the shifting political landscape in the nation will likely stimulate pro-growth reforms and greater security over the medium term—which could ultimately be reflected in better credit metrics, although the firm isn’t reviewing its rating at the moment. Yet there’s also the potential for spending pressures to rise in the near term.”

And part of a note from Moody’s:

“The election results reflect the rising influence of opposition on the policy agenda. This is underpinned by the ongoing societal trends and change among voters where the larger segments are from the black middleclass (sic), born-free, and urban, demanding faster socio-economic changes. These long-term trends create opportunity for reviving the ‘Africa rising’ narrative and could help South Africa escape the low growth trap of past several years.

The change in the political power balance infers a shift from redistributive policies towards more growth-oriented economic management and business-friendly reforms that will expand job opportunities, especially for the country’s youth, while improving service delivery.”

Many are cautious, but there is reason for hope and promise.

 

“South Africa Elections Could Bring Reforms, But Also More Spending”: http://blogs.barrons.com/emergingmarketsdaily/2016/08/08/south-africa-elections-could-bring-reforms-but-also-more-spending/