Investing in Africa - Three Options 7 comments
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As discussed in my last post, getting exposure to the markets’ least developed economies is hard to do with exchange-traded funds. The African continent seems to garner only slightly more investor interest than Antarctica and that interest has thus far mostly been focused on Africa’s most developed countries.
African markets can be split up into three groups:
1) The South African stock market. By far the largest in Africa with a total market capitalization of USD 650 billion. This is an emerging market rather than a frontier market, meaning it is more developed and easier to invest in.
2) Markets in northern Africa. Among these are Algeria, Egypt, and Morocco, some of Africa’s wealthier countries. ETFs with African holdings tend to invest mostly in South Africa, with the remainder directed to these countries.
3) The rest: Less developed markets. The big one here is Nigeria, with a market cap. of USD 110 billion. Other notables include Kenya, Ghana, and the Bourse Regionale des Valeurs Mobilieres exchanges, which lists securities from several different countries. Apart from these, there are only tiny markets.
The table below provides some general figures for the African markets mentioned above. Values may be slightly out-dated; click to enlarge:
It is the last group I am most interested in exploring. Of course, many of those countries are severely lacking with respect to political stability and infrastructure, among other things. However, that is where the opportunities often come from. In a future post, I will go into further detail about those less developed markets and the viability of investing in them.
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This article has 7 comments:
In any cases, there are thousands of funds in Europe and in the US(Franklin being the last one) investing in the MENA region.
The North African markets (namely Morocco and Egypt) have the advantage of being driven exclusively by local factors (with 95% of local investors).
Sub Saharan markets have a large shunk of global investors and consequently are more correlated with S&P500.
Another angle on investing in Africa is to invest in American companies doing business there. For example, this Houston-based Oil E&P has most of its assets in West Africa: EGY. No worries about pipelines through former Soviet Republics or ships having to navigate the Strait of Hormuz. Oil from countries such as Gabon (where EGY's biggest fields are) goes right from the FPSO to a ship in the Atlantic.
quicktake.morningstar....
Whereas, TREMX is basically a Russia, U.K. and Egypt fund and does not have acceptable exposure to Africa to really even claim it. See intl' exposure at the bottom of this page:
quicktake.morningstar....
I have plenty of little-known international holdings and post my portfolio routinely if interested in this sort of play (just posted my high yield self-directed IRA portfolio).