Banking On Kenyan Banks - Conservative Ratios And Stellar Growth [View article]
Political unrest can certainly be a headwind. At some level it is business as usual too though. I think managing in challenging inflation environments is more difficult than managing to political uncertainty, which is more of a constant. That's my anecdotal 2 cents; it would be interesting to run a correlation on banks stock returns and political uncertainty, but it is hard to isolate that factor...
Banking On Kenyan Banks - Conservative Ratios And Stellar Growth [View article]
Thanks H.J. The trends look favorable in the Kenyan banking sector. Valuations reflect that, but for long-term investors I think the entry point is still reasonable. Perhaps initiating a partial position and waiting for some unfavorable macro news makes sense.
Do Africa Funds Provide Access To African Growth? [View article]
I appreciate your comments. Market Vectors Africa Index ETF (AFK) probably comes closest in terms of having meaningful sub-Saharan Africa (SSA) exposure. Its SSA weight excluding Mining, and Oil is 43%. Note that if you also exclude South Africa, you are down to 21% exposure with that fund. Unfortunately, its consumer weight is only about 8%. Most of the fund's non-natural resource assets are tied up in Financial Services (40%) and Telcos (16%). To truly capture the consumer space for US investors one would have to supplement any ETF exposure with individual stocks.
Can They Spare A Penny A Click For International Coverage? [View instapost]
Jon, SA is a great platform and it would make total sense for them to expand their emerging market and frontier coverage well beyond the realm of ETFs. I support you in your efforts and wish you good luck.
Agreeing with @mickelsson that Africa is not one place and neither the "good" nor the "bad" applies uniformly to all 54 countries that comprise the continent. To the extent that "Africa" is an instant-gratification society pursuing the happy life, I don't think they have a lock on that. With the exception of possibly parts of Asia, I think instant-gratification is fairly well entrenched globally. In the African case, that should bode well for consumer stocks as people are eager to spend their new found disposable income.
South Africa: A Glass Half Empty Or Half Full? [View article]
@adammac, agreeing with you re: Ghana. There are some interesting companies there and social cohesion is a plus indeed. Liquidity can be difficult. @ambiorix and @winningtrader, you make a good case for "the glass half empty." I think RSA has some serious headwinds that if left unchecked could dampen economic growth, not to speak of the potential damage to the fragile social fabric of society. A bottom up strategy looking at individual companies that have more exposure to the upside like retailers with cross border expansion for example (careful, some are getting expensive) vs. a broad macro play on RSA makes the most sense. I think extractive industries are most at risk from the social and political issues in RSA and I am staying away from those. @ mickelsson, yes I am in complete agreement. RSA stocks are not without risk and are not a replacement for US "dividend champions." They are emerging market stocks and some have interesting opportunities. If you take the time to dig through he universe you might unearth some gems. I also don't think putting all your Africa exposure in RSA is wise. International diversification works and should be pursued, especially in emerging and frontier markets.
The Case For Investing In South Africa (Part II) [View article]
I appreciate all the comments the article has generated. Just a few follow ups: 1) The untapped labor pool, as @normanbk pointed out, is indeed a source of both opportunity and strife and that dynamic should be closely followed. Labor in general is an issue investors ought to consider from multiple angles in SA. The recent unrest only underscores that further. 2) @Scottv, I also view the wage settlements as a positive for consumer spending. The consumer is really what I am most excited about as an investor in SA and SSA. 3) Is the glass half full in SA and half empty in SSA as @Alpine suggests? Something to consider indeed. Investing in companies in SA that focus on SSA as a possible way of having my cake and eating it too? 4) Malema...hopefully history will show he was but a blip on the radar screen. 5) Sasol? MTNOY? Gold Fields? Anglo?Sappi @wdjax0n, jlmanfred. My interest/expertise lies mostly with what is above the ground (the consumer, the infrastructure) than what is in the ground (the natural resources). MTN is not that exciting to me for the reasons cited (Iran, Syria, etc) but also not sure this telco behemoth is particularly in a sweet spot at the moment. More interesting telco companies might be smaller more nichy players. Sasol is of course a big player in the gas and coal to liquids market. Its prospects bode will considering the growth of new energy sources and alternative liquid hydro carbons. For investors with environmental considerations, the energy intensity of Sasol's processes are something to be concerned about. More a function of the energy model of the company than poor environmental management, but nevertheless something to be aware of.
In my next article, I will be sure to further address the glass-half-empty, glass-half-full question.
The Case For Investing In South Africa (Part II) [View article]
Those are good questions PompanoFrog. Certainly economic growth rate is only meaningful from an investor's perspective if it translates into higher stock market returns. In the case of RSA that has been the case at least based on the last decade. Isolating competitive index ranking and correlating it with stock market returns might be a more challenging exercise. I think it would be important to not just look at the absolute ranking but at the trend in the ranking. A country that has a poor ranking but is steadily improving might be more interesting for investors than a country that has generally ranked high but is slipping.
I would note that conversion efficiency is just one of the ingredients that drives the cost per watt. FSLR makes up for that with materials efficiency. This had traditionally been enough to stay at a lower cost/watt until Poly-si prices started tanking, substantially wiping out their cost advantage. Going forward, I think 2 things will matter: 1) what happens to poly-si prices from here, 2) who can optimize the balance-of-systems cost. At the end of the day it is the installed cost per watt that matters, taking FSLR's utility scale model and large projects expertise, they might yet be a winner. I do agree with you though, that Chinese players are the ones to beat and are formidable competitors.
Banking On Kenyan Banks - Conservative Ratios And Stellar Growth [View article]
Banking On Kenyan Banks - Conservative Ratios And Stellar Growth [View article]
Western Wind & Brookfield: Time To Declare Victory And Go Home [View article]
The World Bank's IFC Investment Arm In Emerging And Frontier Markets: What We Can Learn [View article]
Do Africa Funds Provide Access To African Growth? [View article]
Do Africa Funds Provide Access To African Growth? [View article]
Do Africa Funds Provide Access To African Growth? [View article]
Can They Spare A Penny A Click For International Coverage? [View instapost]
The Case For Investing In Africa [View article]
South Africa: A Glass Half Empty Or Half Full? [View article]
@ambiorix and @winningtrader, you make a good case for "the glass half empty." I think RSA has some serious headwinds that if left unchecked could dampen economic growth, not to speak of the potential damage to the fragile social fabric of society. A bottom up strategy looking at individual companies that have more exposure to the upside like retailers with cross border expansion for example (careful, some are getting expensive) vs. a broad macro play on RSA makes the most sense. I think extractive industries are most at risk from the social and political issues in RSA and I am staying away from those.
@ mickelsson, yes I am in complete agreement. RSA stocks are not without risk and are not a replacement for US "dividend champions." They are emerging market stocks and some have interesting opportunities. If you take the time to dig through he universe you might unearth some gems. I also don't think putting all your Africa exposure in RSA is wise. International diversification works and should be pursued, especially in emerging and frontier markets.
The Case For Investing In South Africa (Part II) [View article]
Jan
The Case For Investing In South Africa (Part II) [View article]
1) The untapped labor pool, as @normanbk pointed out, is indeed a source of both opportunity and strife and that dynamic should be closely followed. Labor in general is an issue investors ought to consider from multiple angles in SA. The recent unrest only underscores that further.
2) @Scottv, I also view the wage settlements as a positive for consumer spending. The consumer is really what I am most excited about as an investor in SA and SSA.
3) Is the glass half full in SA and half empty in SSA as @Alpine suggests? Something to consider indeed. Investing in companies in SA that focus on SSA as a possible way of having my cake and eating it too?
4) Malema...hopefully history will show he was but a blip on the radar screen.
5) Sasol? MTNOY? Gold Fields? Anglo?Sappi @wdjax0n, jlmanfred. My interest/expertise lies mostly with what is above the ground (the consumer, the infrastructure) than what is in the ground (the natural resources). MTN is not that exciting to me for the reasons cited (Iran, Syria, etc) but also not sure this telco behemoth is particularly in a sweet spot at the moment. More interesting telco companies might be smaller more nichy players. Sasol is of course a big player in the gas and coal to liquids market. Its prospects bode will considering the growth of new energy sources and alternative liquid hydro carbons. For investors with environmental considerations, the energy intensity of Sasol's processes are something to be concerned about. More a function of the energy model of the company than poor environmental management, but nevertheless something to be aware of.
In my next article, I will be sure to further address the glass-half-empty, glass-half-full question.
Jan Schalkwijk, CFA
Africa Capital Group
http://bit.ly/Uyp1g7
The Case For Investing In South Africa (Part II) [View article]
Jan Schalkwijk, CFA
Africa Capital Group
http://bit.ly/Uyp1g7
The Case For Investing In South Africa (Part II) [View article]
Jan Schalkwijk, CFA
http://bit.ly/Uyp1g7
How To Play The Solar Revival [View article]