A recent article from The Street notes the recent boost which investors have seen from funds which are invested in Africa and the Middle East, noting that many of the economies in these regions are ‘booming.’
The article highlights the fact that:
“Boosted by high oil prices, petroleum producers are enjoying some of the best results… In addition, consumer companies are achieving record sales as millions of people leave impoverished villages and join the urban middle class. In 2011, Sub-Saharan Africa grew 4.9%, and the World Banks says that the region should grow 5.3% this year.”
We at Nile Capital Management believe that this strong growth represents the ‘new normal’ for Africa for many years to come. Given the dual economic drivers of natural resource demand and an expanding consumer class, we believe that the economic growth in many of Africa’s nations will remain strong.
In addition, the article points out that:
“The recent strong showing of African stocks represents a big change from last year. Markets throughout the region plummeted early in 2011 as investors feared that the protests of the Arab Spring would spread and disrupt businesses. Stocks suffered again when the European crisis intensified in the summer, and investors lost their appetite for risky shares in the emerging markets. Lately the fears have dissipated as investors worry less about instability in Europe and the Middle East.”
2011 was undoubtedly a challenging year from a geopolitical perspective. However, we continue to feel strongly that Africa’s growth trajectory remains unchanged, and that now is an excellent time to invest there. In fact, it is interesting to note that the challenges that Africa’s markets saw in 2011 largely came from outside factors. Despite that, growth in Sub-Saharan Africa in particular remained strong.
Finally, the article highlights a handful of opportunities which Nile Capital Management finds particularly compelling, especially from a valuation standpoint. To read more about some of the value opportunities we see in Africa, please request a copy of our most recent White Paper “Digging Deeper into Valuations in Africa” from our research library.
For more information, please contact Nile Capital Management at email@example.com or 646-367-2820.
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