September 20, 2016

Bloomberg: Silicon (Valley) Is the Hot New Commodity in Africa

Bloomberg- Silicon (Valley) Is the Hot New Commodity in Africa

"The titans of Silicon Valley are undeterred by the economic slump afflicting much of Africa. Facebook Inc., Google, Oracle Corp. and Uber Technologies Inc. are at the leading edge of turning the world’s frontier markets digital. As the commodity crash buffets the continent’s biggest economies, the interest and investments couldn’t come at a better time. Almost half of foreign direct investment projects in Africa last year were in technology, telecommunications, financial services and consumer products."

For the full article, please click here.




Nile Capital Management
We Know Africa: From Cairo to Cape Town
For more information please call 646-367-2820

August 24, 2016

On South Africa's Rand

South Africa's currency, the Rand, has seen a sharp sell off recently due to reports that the finance minister of South Africa has been notified to appear before the Hawks to face charges. We present the following two charts of the South Africa Rand: first, the Rand from December 2015 when President Zuma removed Finance Minister Nene; and second, the reaction of the Rand to the current news.




Back in December, the Rand fell over 9% across two days before Zuma was forced to appoint Gordhan as the Finance Minister to stem the slide, and the Rand then recovered in the next 2 days to just 2.7% down.

The current sell off in the Rand has not yet reached a similar bottom as compared to the December chart, and it can be expected to get worse if President Zuma does not change course. However, President Zuma would face the same pressures, if not more, as in December and a quick recovery is still possible if Finance Minister Gordhan's situation is resolved amicably.


Nile Capital Management
We Know Africa: From Cairo to Cape Town
For more information please call 646-367-2820

July 5, 2016

Why US Investor Michael Milken Is Bullish on Sub-Saharan Africa

AFK Insider- "Human capital is the world’s best investment, which is why Africa — with its youthful demographic — is such an attractive place to invest, said investor and philanthropist Michael Milken."

For the full article, please click here.




Nile Capital Management
We Know Africa: From Cairo to Cape Town
For more information please call 646-367-2820

May 27, 2016

10 things the IMF wants you to know about Africa's economy

World Economic Forum- "It’s tough for everyone: the world’s growth this year also been revised downward to 3.2%, from 3.4%. Weak recovery to 3.5% next year is expected. But sub-Saharan Africa’s growth is expected to pick up to 4% in 2017, helped by a recovery in commodity prices—but also significantly, timely policy intervention."

For the full article, please click here.




Nile Capital Management
We Know Africa: From Cairo to Cape Town
For more information please call 646-367-2820

April 20, 2016

The Economist: Making Africa Work

The Economist - "...Afro-pessimists should remember two things about commodity busts. They don’t last for ever. And they don’t hurt everyone: 17 African countries with a quarter of the region’s population will show a net benefit from the current one, thanks to cheaper energy. More important, by focusing on the minerals markets it is easy to miss some big trends that are happening above ground—and these are mostly positive."

For the full article, please click here.




Nile Capital Management
We Know Africa: From Cairo to Cape Town
For more information please call 646-367-2820

April 5, 2016

Do you know how diversified Africa's exports are?

World Economic Forum- Do you know how diversified Africa's exports are?  The World Economic Forum has posted an insightful map showing each country's major export. 

For the full article, please click here.






Nile Capital Management
We Know Africa: From Cairo to Cape Town
For more information please call 646-367-2820

March 9, 2016

Yahoo Finance: Lower oil and higher gold could be great for African investments

Yahoo Finance- "Falling crude prices and the rallying gold market could mean bad news for some but good news for many investors in Africa."

For the full article, please click here.





Nile Capital Management
We Know Africa: From Cairo to Cape Town
For more information please call 646-367-2820

February 15, 2016

The Fed and the dollar shock

Financial Times- "The dismal performance of asset prices continued last week, despite a rebound on Friday. There are many different forces at work, but recently the focus has turned to the weakening US economy. This weakness seems to be in direct conflict with the continued determination of the Federal Reserve to tighten monetary policy... The FOMC may be underestimating the need to offset the major dollar shock that is currently hitting the economy."

For the full article, please click here.



Nile Capital Management
We Know Africa: From Cairo to Cape Town
For more information please call 646-367-2820

Goldman Sachs Abandons Five of Six 'Top Trade' Calls for 2016

Bloomberg- "Goldman Sachs to clients: whoops. Just six weeks into 2016, the New York-based bank has abandoned five of six recommended top trades for the year.
The dollar versus a basket of euro and yen; yields on Italian bonds versus their German counterparts; U.S. inflation expectations: Goldman Sachs Group Inc. was wrong on all that and more."

We believe this is good news for potentially allocating to markets such as ours, and highlight the article's note regarding the weaker rand vs peso call being reversed.

Click here for the full article.




Nile Capital Management
We Know Africa: From Cairo to Cape Town
For more information please call 646-367-2820

January 28, 2016

Sustainable and Responsible Investing In Sub Saharan Africa - Does Responsible Investing Outperform In Africa?

A new paper by Investec Securities analyses the performance of HIGH ESG stocks versus LOW ESG stocks.

The results might surprise you.  Positive ESG screening improves risk adjusted returns. The table below summarizes the performance results
  
Mean share price performance (in USD) for Low ESG and High ESG groups

                         1 years              3 years                  5 years
Low ESG          -33%                 11%                        32%
High ESG         -28%                 42%                        55%

Source: Investec Securities

When thinking about Sustainable and responsible investing, ESG acronym stands for environmental, social and governance screening.  The ESG factors are used as positive screening methods that identify opportunities, which promote the principles of responsible investing.


For more information about the paper email us at info@nilecapital.com



Nile Capital Management
We Know Africa: From Cairo to Cape Town
For more information please call 646-367-2820

January 22, 2016

The ‘Africa rising’ story is no fairy tale

Moneyweb Today -  
"Despite global economic headwinds, characterised by a commodity price collapse, the ‘Africa rising’ narrative is still very much alive. However, instead of the continent being championed as a collective, investors are seeking opportunities within regional pockets of sustainable growth. Thursday's Africa Outlook 2016 event, hosted by Frontier Advisory Deloitte in Woodmead, revealed that the continent’s growth story is not as romantic as when it was told three or four years ago." Click through the following link to read the full article: The ‘Africa rising’ story is no fairy tale



Nile Capital Management
We Know Africa: From Cairo to Cape Town
For more information please call 646-367-2820

December 21, 2015

Larry Seruma’s interview with Chuck Jaffe on the Money Life Show


Please listen to Larry’s interview with Chuck Jaffe on the Money Life Show. Larry provides his thoughts on investing in Africa.
A few key points include:

  • The best way to think about Africa is as a frontier market with the benefit of emerging markets exposure underneath the surface. Frontier markets tend to be less liquid given less coverage by Wall Street – about 55 countries on the continent qualify as frontier markets. However, based on market capitalization, 2 countries on the continent (South Africa and Egypt) qualify as emerging markets.

  • Active managers like Nile Capital Management choose their investments in Africa on a country by country basis.

  • In comparing Africa and BRIC, we believe Africa has the advantage in terms of both valuation and growth potential. Less coverage of African markets means lower multiples and bigger discounts to intrinsic value. Anticipated population growth in Africa over the next twenty years suggests market expansion potential, while acceleration in urbanization suggests greater cost efficiencies and thus greater profitability.

  • When making investments outside the United States, investors should think about performance ex-currency. A strong dollar negatively impacts overall performance, even as fund managers like Nile Capital Management have historically demonstrated solid stock picking and portfolio management.

  • In terms of allocating to Africa, we believe that clients should consider that Africa today represents 4% of global GDP and is expected to grow to about 12% of global GDP over the next twenty years. Also, we believe that an active management approach to investing, such as that used by Nile Capital Management, can potentially drive wealth for investors over the long term.
For more information, please listen to Larry’s interview.

http://www.moneylifeshow.com/SaveFiles1/Upload_Files/151208%20-%20Big%20Interview%20with%20Larry%20Seruma.mp3
The views expressed are opinions subject to change and are not investment advice

Nile Capital Management
We Know Africa: From Cairo to Cape Town
For more information please call 646-367-2820


     

December 11, 2015

Oil Continues to Spiral

Over the past week, we continue to see volatility in the markets ahead of next week’s announcement by Janet Yellen regarding Fed policy. Aside from the uncertainty in Fed rates, oil prices and a strong dollar continue to impact the markets.

Oil prices faced another unraveling as the likelihood of rising OPEC production going forward became a focus in the markets, along with strength in the US dollar, solid US production, and a continuing global supply glut.

Figure 1. The Decline in Brent Oil and Crude Oil Prices
Source: FactSet
Last Friday, OPEC decided to continue pumping oil at its current output level, which in November was 31.695 million barrels per day, the largest monthly level in three years. Yet, OPEC cut its forecast for non-OPEC production in 2016, citing the impact of low oil prices and falling investments in oil. The logic is that low prices may force private oil companies out of business, thus helping OPEC. However, the International Energy Agency has indicated that the world’s stockpile of oil is at a record 3 billion barrels and continues to grow. Crude oil inventories are at levels not seen in at least 80 years.

The citing of this glut is a change in past months where declining oil prices was more a result of a strengthening US dollar. As the dollar strengthens, other currencies clearly decline in value such that holders of those other currencies tend to slow down their purchase of these commodities, causing further declines. Essentially, commodities and currencies spiral downward.

We think that investors should look upon the decline as an attractive entry point to invest in actively managed funds such as those offered here at Nile Capital Management. We expect that, as 2016 progresses and a front runner in the US elections becomes clear, the markets should rebound. Hence, we believe investors should consider taking a long-term approach just as we do and allocate to their positions.

The views expressed are opinions subject to change and are not investment advice



Nile Capital Management
We Know Africa: From Cairo to Cape Town
For more information please call 646-367-2820

December 9, 2015

Bloomberg: Four reasons Africa will weather China's slowdown

Bloomberg - The Forum on China-Africa Cooperation in Johannesburg on Dec. 4-5 will mark the growing importance of relations between the Middle Kingdom and the continent. The pomp of the event can’t disguise the fact that the slowdown in the Chinese economy is having repercussions in Sub-Saharan Africa, most notably in Zambia due to its reliance on China’s demand for copper. However, slower growth in China will be more of a speed bump for the region than a change in direction, and there are at least four reasons not to overstate the negative impact. Click through the following link to read the full article: Four reasons Africa will weather China’s slowdown







































Nile Capital Management
We Know Africa: From Cairo to Cape Town
For more information please call 646-367-2820

November 10, 2015

Bloomberg: Where's the Growth? Africa

Bloomberg - Here's a nice way to stump your companions: Ask them what part of the world has had the fastest economic growth over the last 10 years. And whose governments and countries have enjoyed the greatest investment returns among the world's emerging markets.

Did anybody say sub-Saharan Africa? Buy her a drink!

During the past 10 years, the gross domestic product of the 11 largest sub-Saharan countries increased 51 percent, more than twice the world's 23 percent and almost four times the 13 percent expansion of the U.S., the largest economy, according to data compiled by Bloomberg. Click through the following link to read the full article: Where's the Growth? Africa

WINNING THE GDP RACE
SOURCE: BLOOMBERG


Nile Capital Management
We Know Africa: From Cairo to Cape Town
For more information please call 646-367-2820

October 27, 2015

AP - Mega beer merger bets on the rise of African drinkers

LONDON (AP) — Charles Kwara and his friends sit around an earthenware pot, sipping a frothy gray drink through long straws as laughter fills the Charismatic Club in the slums of Kampala, Uganda's capital.

The men joke that the crude brew of fermented millet known as "malwa" makes them feel both high and as if they'd just eaten. It's also what they can afford: they can drink malwa all evening for the cost of a single bottle of branded beer.

"This is cheap," says Kwara, a 47-year-old marketing manager who heads a drinking club. While they'd like bottled beer, home brew is the only option if they want a full night out. "Drinking is also a way of socializing for us," Kwara says.

The Charismatic Club, and brewers like it from Uganda to Ghana to South Africa, have something the makers of Budweiser want: potential customersClick through the following link to read the full article: Mega beer merger bets on the rise of African drinkers

"Everyone is looking for the next big golden egg: It comes down to Africa," said Robert Besseling, a principal analyst on Africa at IHS, a global research firm. "Everyone is anticipating a boom — even though it hasn't happened yet." 



Nile Capital Management
We Know Africa: From Cairo to Cape Town
For more information please call 646-367-2820

October 22, 2015

U.S. News & World Report: Why Africa Is Becoming More Accessible for Investors

Africa offers a young demographic, a growing consumer class and opportunities to build infrastructure.

U.S. News & World Report - When it comes to investing in markets outside of the U.S., Africa is often overlooked. But investing interest in the continent is starting to grow, particularly with investors who have a long-term focus.

In April, The Wall Street Journal reported that the New York State Common Retirement Fund, a U.S. pension fund, planned to invest as much as 3 percent of its assets in the region. And in November, private-equity firm The Carlyle Group bought an 18 percent stake in the Nigerian-based Diamond Bank. Multinational firms are also entering the region. Click through the following link to read the full article: Why Africa Is Becoming More Accessible for Investors

Investors should remember that Africa is not one big economy, but is made up of many markets.



Nile Capital Management
We Know Africa: From Cairo to Cape Town
For more information please call 646-367-2820

October 9, 2015

Emerging Markets Beginning to Move

Emerging markets outperformed US markets for the second week in a row and gained some steam over the prior week’s out performance. The MSCI emerging markets index was up 6.41%, nicely ahead of the S&P 500 index rebound of 4.71% for the past seven days. It appears that the markets are taking a breather on some of the issues that have been of concern.

Fed rates and impact on currencies. The market has strengthened confidence over where the Fed is headed: Fed futures pricing suggest no increase until 2016. If the Fed does not increase rates, borrowing costs continue to remain cheap, limiting detractors to growth.

With the feeling that the Fed is not going to raise rates this year, foreign currencies have strengthened over the past month. Consider the trough of the following currencies against the USD over the past month versus where the currencies are today. Whereas 1 South African Rand would have cost investors barely over $0.07 cents on September 28, today it costs over $0.075. Likewise, whereas 1 Brazilian Real would have cost investors less than $0.24 on September 23rd, today it costs over $0.26.

Figure 1. South African Rand versus USD
South Africa - Emerging Markets
Source: Bloomberg

Figure 2. Brazilian Real vs. USD
Brazil - Emerging Markets
Source: Bloomberg

Commodity trends. A number of regions outside the US tend to be rich in natural resources, including Africa and the Middle East. We note that commodities remain volatile but have shown some signs of stabilization, including oil and copper (with the miners of the latter having reduced output).

Figure 3. Commodity Futures Price Quotes for Crude Oil WTI (NYMEX)
Commodity Future Prices for Crude Oil
Source: NASDAQ

Figure 4. Commodity Futures Price Quotes for High Grade Copper
Commodity Future Prices for High Grade Copper
Source: NASDAQ

Valuation. Emerging markets look attractive to investors on valuation. Note the following discounts between the World Index and Emerging Markets across price to earnings and price to book, both today and over the 10-year period.

Figure 5. Market Valuations As of September 30, 2015

Market Valuations - MSCI EM

Conclusion. While we think the last couple weeks have shown some encouraging trends that could continue through the quarter, we expect the markets to remain volatile, especially as we enter in 2016 and the Fed rates issue bounces back into investors’ minds. Given this outlook, we think actively managed funds with a long-term perspective will be critical for investors’ portfolios and believe investors should consider this opportunity to allocate to Nile. 
The views expressed are opinions subject to change and are not investment advice


Nile Capital Management
We Know Africa: From Cairo to Cape Town
For more information please call 646-367-2820

September 28, 2015

CNBC: Bob Diamond - Africa is best place to invest right now

CNBC - Investors looking to place their money outside of the U.S. should look no further than sub-Saharan Africa, Atlas Merchant Capital CEO Bob Diamond said Thursday. "There are a lot of reasons to be positive in the medium-to-long term for sub-Saharan Africa," the former Barclays CEO said in a CNBC " Power Lunch" interview. Click through the following link to read the full article: Bob Diamond: Africa is best place to invest right now


Nile Capital Management
We Know Africa: From Cairo to Cape Town
For more information please call 646-367-2820

September 18, 2015

Fed Rate Hikes - A Back Half 2016 Story, In Our View


After substantial discussion on the Street and volatility across global markets, the Fed chose to ignore the noise and announced that it will not be raising interest rates at this time. We say good for the Fed!

In our view, the Fed was essentially put in a no-win situation, so chose to ignore the noise and focus on fundamentals. Raising rates by 25 basis points makes no sense in terms of the fundamentals of the US economy; plus, further strengthening of the dollar will not help global markets over the long-term despite any near-term relief rally. Keeping rates unchanged may induce continued volatility across markets, but, in our view, the Fed did the right thing, and investors should consider such volatility as an attractive buying opportunity.

In our view, we think future rate hikes are highly unlikely until the second half of 2016 for a variety of reasons. For one thing, politics. 2016 is an election year. So, unless absolutely needed, why mess with the economy and the markets? On the other hand, by late 2016, with the Obama administration on its way out, a rate hike of 25 to 50 basis points could be the signal of a successful presidency. The president entered office at a time the country was hurting from a financial meltdown and could be exiting at a time of a much strengthened economy where a small rate hike could be justified as a new turn in monetary policy. For another thing, inflation trends. The August 2015 Inflation rate was 0.2%, versus the Fed target of 2% for a rate hike. Gas prices are a big factor driving the moderated inflation rate, with prices at the pump down 1% year-over-year. Unless a significant shortage suddenly erupts perhaps due to disruption in the Middle East, we do not foresee a major reversal of the trend. Note that gas prices today are roughly in line with prices in 2009, though with the US economy and the US consumer in a much stronger position. 

US Regular Gasoline Prices

Source:  US Energy Department.
In terms of how the Fed views a sluggish Chinese economy (or, for that matter, any economy outside the US), we think that this week’s decision suggests that the US economy still remains the Fed’s focus. That is how it has always been when the world was dominated by the economies of the US and Western Europe – and that is how the Fed will continue to operate even as other economies bloom. And we agree with that philosophy.

Now, in terms of where to invest, we reiterate once again: take advantage of the market volatility to diversify portfolios. Market behavior is cyclical, and valuations in Africa and other frontier and emerging markets have come down nicely. So take this opportunity to allocate to actively managed funds focused on those regions.      
The views expressed are opinions subject to change and are not investment advice


Nile Capital Management
We Know Africa: From Cairo to Cape Town
For more information please call 646-367-2820

 

BloombergView: Africa Starts to Emerge

BloombergView - I come bearing good news about Africa. The continent is finally starting to emerge. Pessimism about Africa is so pervasive that people don't even have to say it out loud -- it's just assumed. When development economists such as Paul Collier write books with titles like "The Bottom Billion," they remember to mention a handful of countries in Central Asia, but you know the book will be almost entirely about Africa. As for the reason for Africa's benighted situation, explanations range from the legacy of exploitative colonialism to the resource curse to endemic war to the health effects of malaria. Often, in discussions about Africa, there is an undercurrent of racism. Click through the following link to read the full article: Africa Starts to Emerge.

Africa Starts To Emerge | Investing in Africa


Nile Capital Management
We Know Africa: From Cairo to Cape Town
For more information please call 646-367-2820