Tag Archives: African stocks

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

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/

Mining Company Anglo-American May Be Pressured to Create a Separate South African Company

anglo-american-logo   South Africa, through their own Public Investment Corp. (PIC), may want to break up Anglo-American (NGLOY|OTC MARKETS; AAUKF|OTC MARKETS), a large mining conglomerate, in order to create a more nationally-oriented (and controlled?) mining company:

“London and Johannesburg-listed Anglo American has been attempting to sell many of its operations worldwide in recent months, jettisoning coal and iron ore to concentrate on three key products, copper, the De Beers diamond business and platinum.”

“South Africa’s ruling African National Congress party is also looking for ways to boost the economy and gain public support following recent electoral setbacks… A source close to the situation pointed out that the South African government has often aired the view that it would like to see a nationally owned mining company emerge “at some point…”

Mining companies have been hit hard lately by the commodities “bust”, but there may be some investment “values” out there worth examining.

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!

“South Africa Wants Break-up of British Mining Company Anglo American”: https://www.thestreet.com/story/13675053/1/south-africa-wants-break-up-of-british-mining-company-anglo-american.html

Standard Bank is Committed to Francophone Africa (Third in a Series)

standard bank   As we reported a couple of years ago, Standard Bank has as part of their growth strategy a commitment to move into francophone Africa. This continues to be the case, including their foray into Cote d’Ivoire:

” The pan-African lender plans to use the market as a gateway to expand across the francophone West Africa region.”

“The Standard Bank group, now in 20 African markets, aims to open its first branch in Abidjan by the end of the first quarter of 2017. According to Boyer, around 60% of the market share is held by five banks and there is potential for Standard Bank to introduce retail banking operations. However, he added the strategy is to grow slowly.”

“While South African companies have grown their African footprint across a number of English-speaking markets, they have typically been slower to expand to French-speaking countries – a result of challenges posed by the language barrier.”

But as we can see, this reluctance to go into francophone (and even lusophone) Africa,  is changing, and the prospects for growth are there for these South African companies, including the banks, and for you as an investor.

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 Standard Bank is expanding to francophone West Africa”: http://www.howwemadeitinafrica.com/standard-bank-expanding-francophone-west-africa/55342/

Bank Expert Sees South African Banks as Solid (Second in a Series)

capitec bank   In this second post in our series concerning banking in Africa, let’s focus on South African banks.  This could be a great play on the growth of the rest of Africa, because most South African banks have as a large part of their strategy to expand in sub-Saharan and/or the rest of Africa, in commercial and/or retail banking.

We’ve discussed banking in Africa previously, for example here and here. While there are some analysts who believe that only one bank in South Africa is poised to do well, a bank ratings expert, headquartered in London, says that:

“Based on all of the banks we have rated so far, which are about 250 around the world, the South African banks as a whole are distinctly the best in the world. There is no two ways about it.”

Why?

I think it has to do with several things. First of all they score very well on the financial side of our ratings criteria – that’s stuff like capital, liquidity and all the financial ratios that are very important in assessing banks. But they also score very well on the so-called qualitative criteria, which is where we look at things like strategy, like culture, like living the brand promise. They’re actually extremely impressive banks – that’s taking the South Africa banks as a whole. We looked at the big five, including Capitec.”

We still need to do our “homework”.  They looked at the “big five” (Capitec (CPI|JSE), Barclays Africa (BGA|JSE), FirstRand (FANDY|OTC MKTS.; FSR|JSE), Standard Bank (SGBLY|OTC MKTS.; SBK|JSE), and Nedbank (NED|JSE)), but, to reiterate, he said that “…South African banks as a whole are distinctly the best in the world.”

Africa Investment Report owns shares in iShares MSCI South Africa, which has holdings (owns shares) in Standard Bank and FirstRand.

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!

 

“Capitec, Barclays Africa and Atlas Mara: Thoughts From a Bank Ratings Expert”: http://www.howwemadeitinafrica.com/capitec-barclays-africa-atlas-mara-thoughts-bank-ratings-expert/55269/

 

 

Others Are Investing in African Banks – Are You? (First in a Series)

Bank of Africa   Several financial institutions, including the Dutch bank, Rabobank, have created Arise, to participate in deals in banks in Africa, including the Bank of Africa, a pan-African banking conglomerate.

“Arise sera opérationnel à partir du 1er janvier 2017.

Rabobank apportera ainsi ses parts dans Zambia National Commercial Bank (Zanaco, 66 agences, environ 1 million de clients et 330,7 millions de dollars de crédits), le tanzanien National Microfinance Bank (175 agences, plus de 2 millions de clients et un total de 1,1 milliard de dollars de crédits), le rwandaisBanque populaire du Rwanda (BPR – 192 agences, 626 000 clients et 159,6 millions de de dollars de crédits), le mozambicain Banco Terra BTM (9 agences, environ 28 000 clients et 47,4 millions de dollars de crédits) et l’ougandais DFCU Bank (45 agences, 256 000 clients et 247,5 millions de dollars de crédits).”

Translation:

“Arise will be operational from 1 January 2017.

As a result, Rabobank will bring its stake in Zambia National Commercial Bank (Zanaco, 66 branches, approximately 1 million customers and 330.7 million dollars in credits), the Tanzanian National Microfinance Bank (175 branches, more than 2 million customers and a total 1.1 billion in credits), the Rwandan Banque Populaire du Rwanda (BPR – 192 branches, 626,000 customers and 159.6 million dollars of credits), Mozambique’s Banco Terra BTM (9 agencies, 28 000 customers and 47.4 million of loans) and the Ugandan DFCU Bank (45 branches, 256,000 customers and $ 247.5 million of credits).”

These “investor groups” are investing in the long-term growth in Africa through its financial institutions that believe in its future.  In this series, we will discuss and look at banks you might want to invest in.

“Plusieurs prêteurs européens créent un holding d’investissement dans les banques subsahariennes” (“Several european lenders create a holding company to invest in sub-Saharan banks”):  http://www.jeuneafrique.com/346815/economie/plusieurs-preteurs-europeens-creent-holding-dinvestissement-banques-subsahariennes/

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/

Orange Desires to Grow in Africa, and It’s Working

orange afrique

Orange (France Telecom) has announced that its sales in Africa and the Middle East has grown 3.3% for the first six months of this year.  It has also made four acquisitions, representing 12 million new customers. We recommended that you take a look at this company about two years ago, and it looks like it’s still worth consideration.

Sa plus belle performance durant les six premiers mois de l’année a été réalisée en Afrique et au Moyen-Orient, région dans laquelle Orange compte une vingtaine d’implantations et où ses ventes ont augmenté de +3,3 % à 2,516 milliards d’euros au premier semestre. C’est d’ailleurs dans cette zone qu’Orange a été le plus actif.”

Translation:

“Its best performance in the first six months of the year was carried out in Africa and the Middle East region in which Orange has twenty installations and where its sales rose 3.3% to 2.516 billion from euros in the first half. This is also in this area in which Orange was the most active.”

They have divested themselves of Telecom Kenya, but are strengthening their businesses in French Africa and West and North Africa.

More growth still looks possible.

“Orange confirme sa croissance en Afrique et au Moyen-Orient au premiere semestre”: http://www.jeuneafrique.com/345099/economie/orange-maintient-croissance-afrique-moyen-orient-premier-semestre/

In addition to Anglophone, we’re scanning French and Portuguese business information to make sure we can let you know about the best opportunities in investing in African stocks.

Africa Investment Report owns shares in Orange.

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