Category Archives: Emerging Markets and Africa

Shoprite Growing in Other African Countries

shoprite africa  Shoprite (SRGHY|OTC MARKETS), South Africa’s largest food retailer, and in fact Africa’s largest food retailer, has beaten estimates and sales are rising:

“Sales gained 12 percent on a 52-week basis, driven by a 29 percent increase outside South Africa. The rise elsewhere on the continent was achieved despite weaker local currencies relative to the U.S. dollar and the negative effect of depressed commodity prices, while growth in West African countries has been stifled by a lower oil price and a shortage of foreign currency.”

“Shoprite opened 22 new supermarkets outside South Africa during the year, mostly in Angola, Zambia and Nigeria. Sales growth was led by Angola, where the company said it’s not restricted by a severe shortage of foreign exchange in the country and is able to restock its 29 supermarkets on an ‘almost continuous basis.'”

This is one of those South African stocks that could prove to be a great play on the rest of 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!

“Africa’s Biggest Food Retailer Beats Estimates as Sales Rise”: http://www.bloomberg.com/news/articles/2016-08-23/shoprite-full-year-profit-beats-estimates-on-africa-sales-growth

 

 

 

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/

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

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/

 

Rezidor Hotel Group Believes in African Growth – Do You?

carlson rezidor hotel group

The Rezidor Hotel Group, part of the Carlson Rezidor Hotel Group, remains committed to Africa, with currently 80,000+ rooms and 22,000+ in the pipeline.

“We are committed to the continent and will continue to expand our network in line with our clear strategy, covering capital cities and selected hubs across Africa to drive scale and unlock value for our owners, partners, employees and guests”, commented Elie Younes.”

They own the Radisson brand and its brand extensions, among others, and it is reputed to be the largest hotel chain in Africa.

You can only buy their stock through the Stockholm Stock Exchange (STO), but it may be well worth it as a long-term investment.

They believe in the long-term growth of Africa; shouldn’t you?

“Rezidor keeps development momentum despite challenging market conditions and reaches 80,000 rooms in operation” (sic): http://www.hospitalitynet.org/news/4077192.html

 

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/