South Africans on new trek into Africa
While developed economies such as the US and Europe are experiencing declining economic growth, there is currently a wave of African growth which is attracting investment which is opening its door to the world particularly a new breed of South African inv
Investment company Imara S.P. Reid Stockbrokers reports that it is seeing this interest increasing, and will continue to do so for the foreseeable future.
Investment interest
Imara S.P. Reid Stockbrokers was originally developed by sister-company Imara Africa Securities to take institutional funds into Africa’s sub-Saharan ‘Frontier Markets’. Because of increased interest, S.P. Reid has widened the offering to accommodate individual saver-investors who until now have had limited opportunity to buy shares on African stock markets.
Simon Reid, Head of Imara Africa Securities, noted, “Since we opened up African investment to retail clients at the end of June, response has consistently exceeded expectations. We process an average of five new investors a day. They see Africa as a growth opportunity and a diversification play.”
Number of key growth areas evident
There are a number of key growth markets which investors can take advantage of. Banks, retailers and telecoms are moving into Africa in search of better growth prospects than are available here at home. Big international fund managers and local pension funds are also active participants in these markets.
“Retail investors were denied these opportunities for many years. Now they think that if the big players are getting involved, it’s time we got in on the action as well,” says Reid.
Strong recent gains on several African stock exchanges also excite strong interest.
“Some African indices have shown gains well above 20%. Clearly, this focuses attention on the potential for capital gains at a time when many international markets offer lacklustre performance at best.”
New retail clients are not the first to trek into African markets. Even when presented with no growth vehicle, some individual saver-investors were eager to commit funds.
“We handled an inflow of R150 million from retail clients on the run-in to the launch as word spread about this unique opportunity,” said Reid, “since then, enquiries have not let up. We expect interest to continue. Over time, we expect African securities to have an accepted place in a well-diversified portfolio; especially among those who have confidence in the long-term growth of African economies,” says Reid.
Editor’s Thoughts:
It is clear that the African investment climate is improving and is embracing the investment from the rest of the world. At the 2013 IISA conference, IISA David Harpur was openly optimistic about African growth and pointed to Allianz’s re-entry into the market as an example of this.
Advisors need to realise this and the fact that it presents an opportunity for new areas of growth. How do you feel about Africa re-opening its doors? Please comment below, interact with us on Twitter at @fanews_online or email me your thoughts - jonathan@fanews.co.za.
