Category Archives: Concepts of Africa & Investing

Is Growth Returning to South Africa?

pexels-photo

Though the local elections in South Africa could affect its growth, some think that South Africa and other emerging market countries, excluding China, are poised for growth:

“Excluding China, emerging markets should see a resurgence in growth next near of 0.9% he concludes, with a subset of countries — Argentina,Venezuela, Brazil, Russia, Hungary and South Africa — growing at 2.9% on average.”

Time to look at South African stocks, and those investing in South Africa (“plays”)?

“Is Emerging Market Growth About to Return?”: http://blogs.barrons.com/emergingmarketsdaily/2016/08/02/is-emerging-market-growth-about-to-return/

Why J.P. Morgan Is Expanding Its African Activity and What This Could Mean For You

jp morgan

Agence Ecofin, a French financial news publication, recently reported that J.P. Morgan announced the appointment of Kevin Latter to to head its South African subsidiary and its investment banking business in Sub-Saharan Africa.

As the article says, this underscores the growing importance of this region to them:

“Même si le secteur est en repli depuis le début de l’année 2016, de nombreuses expertises et analyses défendent l’hypothèse selon laquelle, les bas niveaux des prix des actifs en Afrique sont une opportunité  pour de prochaines fusions acquisitions, afin de bénéficier des effets positifs des synergies de groupe.”

Translation:

“Although the sector is in decline since the beginning of 2016, numerous experts and analyses defend the hypothesis that low levels of asset prices in Africa are an opportunity for future mergers and acquisitions, in order to gain from the positive effects of group synergies.”

They are looking at “low levels of asset prices”.  This might mean that there are some “bargains” for those  of us who are interested in buying African stocks. Hmmmm…

“JP Morgan estime pour sa part que des investissements visant à prendre des positions sur des sociétés cotées avec un contrôle de l’actionnariat seront en hausse dans la région.”

Translation:

“JP Morgan takes the view of taking controlling positions in investments in listed companies that will rise in the region.”

So they believe that there are “listed companies” (on the stock exchanges) that will rise in Sub-Saharan Africa.  So do we here at Africa Investment Report. If you haven’t yet, be sure to subscribe on this page to get updates.

“JP Morgan recrute un expert en fusions acquisitions pour l’expansion de ses activités africaines” (sic): http://www.agenceecofin.com/banque/1807-39625-jp-morgan-recrute-un-expert-en-fusions-acquisitions-pour-l-expansion-de-ses-activites-africaines

How the Rich Increase Their Wealth (And Maybe Everyone Should)

Geschftsmann mit Weinglas

The wealthy, it seems, grow their wealth through investing in financial securities (stocks, mutual funds, bonds, ETF’s, etc.). The middle class, however, have most of their wealth tied up in their main residences (their homes).

“That’s among the findings of a study released by New York University economist Edward Wolff. In analysis of data from the Federal Reserve’s Survey of Consumer Finances, Wolff found that the wealthiest 1% of Americans have only 9% of their gross assets in their personal residences, while nearly 30% is invested in financial securities like stocks and mutual funds. The rest is in business equity and other real estate investments.  In contrast, the study found that the middle class have nearly two-thirds of their wealth in their residences.”

“Further down the wealth chain, a TIAA Creff study called the Affluent Investor Barometer had similar findings: 63% of survey participants with at least $250,000 in investable assets say stocks offer the most opportunity to grow their wealth, with real estate a distant second at 12%.”

So in order to increase wealth, stocks and other securities, including those of companies doing business in Africa, are one of the main places to be.

Subscribe to Africa Investment Report on this page to learn more in the future!

 

“Tip from the Rich: Don’t Tie Up Money in a Home”: http://www.blackenterprise.com/money/financial-tip-rich-don%E2%80%99t-tie-up-money-home/

 

Is Africa the New Asia?

America, Europe, Africa, Asia signpost

America, Europe, Africa, Asia signpost

Martyn Davies, managing director for emerging markets and Africa at Frontier Advisory Deloitte, thinks there is a chance that Africa could be the next Asia as far as economic growth is concerned, but:

“Africa’s notoriously non-inclusive growth model must adapt, and adapt fast, in order for real economic transformation to take place. Countries will need to deepen their economies through diversification and those that are able to achieve this will move towards a more qualitative and ultimately sustainable growth trajectory. This has been the story of Asia over the past three decades. Africa’s tilt toward Asia has been up until now a reflection of the direction of trade and flow of trade between the two regions. There are however, deeper lessons in sustainable growth and developmental that Asia presents to Africa’s frontier economies.”

Some say this is the last investment frontier. Are you invested in it?  Sign up for our free report and we will keep you posted!

“Will Africa follow Asia’s developmental growth trajectory?”: http://www.howwemadeitinafrica.com/will-africa-follow-asia-developmental-growth-trajectory/55137/

 

Emerging Foreign Investment Flows May Double: Time to Invest?

Money out of a plastic pipes    This could be the time to invest in emerging market countries, of which South Africa is one. (Some also mention Nigeria as an emerging market country, but it is still arguably a frontier market one.)

“Foreign investment in emerging markets should double this year to $550 billion compared to 2015, despite local selling pressure and Brexit, according to the Institute For International Finance.”

“In its July report,  the group explained its reasoning behind why emerging markets will remain attractive to foreign investors. Here are eight important assumptions from the institute’s lengthy report, and comments from the release on profitability and country exposure:

  1. Investors want yield and that is a key driver for emerging market capital flows.
  2. Brexit could intensify appetite for emerging market growth.
  3. EM economic growth is in a gradual cyclical recovery.
  4. The U.S. Fed is unlikely to produce hawkish policy surprises, which would draw investors to U.S. yields from EM yields.
  5. China is likely to avoid a disorderly movement in its currency, the renminbi, in order to keep short-term growth in line with its target, despite the resulting slowness in structural reform and high-and-rising debt levels.
  6. Brexit is likely to have a muted impact on emerging markets except those in Eastern Europe.
  7. Stabilization of commodity prices should benefit EMs, with oil prices to remain around the $45-50 per barrel in the third quarter.
  8. EM valuations are attractive.”

Many South African-based multinationals are already in and/or expanding into other parts of Africa.  This could be a good time to look at them. We’ll keep you posted!

8 Reasons Emerging Foreign Investment Flows May Double: http://blogs.barrons.com/emergingmarketsdaily/2016/07/14/8-reasons-emerging-foreign-investment-flows-may-double/2/

Could You Be Missing Out on Investing in Francophone Africa?

FRENCH EQUATORIAL AFRICA - CIRCA 1946: a stamp printed in French Equatorial Africa shows Young Bacongo Woman, circa 1946

FRENCH EQUATORIAL AFRICA – CIRCA 1946: a stamp printed in French Equatorial Africa shows Young Bacongo Woman, circa 1946

Many investors in anglophone countries don’t seem to understand, or are afraid of, investing opportunities in francophone Africa.  Although this article from South Africa discusses it from their perspective and from a total business perspective (as opposed to a stock investor perspective), the theme here is relevant.

“Francophone Africa remains a bridge too far for most risk-averse South African investors. Only a handful of SA’s sizeable corporates have made the journey to countries in this complex but promising region, kept at bay by the invisible barriers of language and foreign business culture.”

We here at the African Investment Report remain “on the hunt” for great stocks in all of the countries of Africa, whether the culture is anglophone, french, lusophone or “whatever”.  The important thing is to find great investments that you can add to your portfolio.

Also see:

“Orange Could Be A Great Stock to Buy and a Great Play on African Growth”

“Standard Bank’s Expansion Into French Africa Teaches Us About Africa’s Investment Growth Potential”

“How to Invest in French Africa From Home”

Risk-averse Companies Missing Out in Francophone Africa: http://www.bdlive.co.za/opinion/columnists/2016/07/04/risk-averse-companies-missing-out-in-francophone-africa

Time to Ring the Bell for Nigerian Stocks?

333573

333573

The Hon. Yakubu Dogara, Speaker of the Nigerian House of Representatives, rang the closing bell for the Nigerian Stock Exchange (NSE) this past Friday. Leaders in the Nigerian legislature are pushing for reforms and innovations for the exchange.

“The Hon. Tajuddeen Yusuf (PDP, Kogi)-led House Committee on Capital Market and Institutions last month held a conference on the capital market and Nigeria’s economy in Abuja with a view to brainstorming on how to mainstream the market as a major driving force in repositioning the nation’s economy via initiatives that will enable ordinary Nigerians (to) key into opportunities available at the Exchange to increase their propensity for long term investment.”

This could be very positive for Nigerian stocks. There were other indications in a previous post that outlook for Nigerian stocks could improve.  We need to monitor NGE carefully.

“Dogara to Ring Closing Bell at Nigerian Stock Exchange” : http://thebossnewspapers.com/2016/07/08/dogara-to-ring-closing-bell-at-nigerian-stock-exchange/

South African ETF Proving “Resilient”

Front view of punching fist on gray background, flag of South Africa

Front view of punching fist on gray background, flag of South Africa

South Africa is “bouncing back” from the Brexit “crisis”, despite what the naysayers were predicting.

“So much for Brexit’s impact on the global economy. With this week’s rally, the iShares MSCI Emerging Markets exchange-traded fund (EEM) is now up more than 6% for the year as the second quarter winds to a close.

BEST YTD%
Peru 46%
Brazil 41%
Colombia 24%
Russia 19%
Thailand 17%

South Africa has proved resilient, up 11% year to date.

 

“Emerging Markets’ Best and Worst Countries of 2016”: http://blogs.barrons.com/emergingmarketsdaily/2016/06/30/emerging-markets-best-worst-countries-of-2016/

Are Nigeria and the Rest of Africa Risky Bright Spots After Brexit?

brexit2     I owned the Global X MSCI Nigeria ETF (NGE) a while ago, but dumped it because there were all kinds of political problems there and the stock was going down fast. Maybe I should have held on, and I’m considering buying it again.

“And in Africa, the Global X MSCI Nigeria ETF (NGE) was among the few ETFs momentarily in the green. It was trading flat to higher after tumbling 14% over the past four weeks on Nigeria’s currency devaluation. The fund is shaping up to be the best performer of the week among developing market ETFs, with a rise of nearly 9%. If you bought the fund at the right time, that’s not so shabby.”

And maybe this speaks to Africa not suffering much or at all from Brexit, and that there are some stock-buying opportunities to come.

“3 Risky Bright Spots After Brexit: Gold Miners, Brazil Bank, Nigeria?”: http://blogs.barrons.com/emergingmarketsdaily/2016/06/24/3-risky-bright-spots-after-brexit-gold-miners-brazil-bank-nigeria/

France, Not China, is The Biggest Direct Investor in Africa

France_flag-lgMany people think that China, even though their economy is experiencing some rough spots, is the largest non-African investor in terms of direct investment. The truth is that France is the largest direct investor in Africa, as articles like this one have pointed out in the past.

What does this mean for the individual investor? It means that they could find more opportunities if they weren’t limited to learning only about anglophone (U.S., U.K. and Australian) companies that invest in Africa, for the most part.

Getting more information about French companies that invest in Africa could widen your scope and give you more opportunities.  That’s part of what we do at Africa Investment Report!