If a financial adviser offered her clients a chance to invest in a country that expected economic growth of 6% or 7% a year for the next two decades, chances are the clients would jump at the prospect.
With the Ebola virus ravaging the populations and economies of several West African countries, and armed conflicts claiming lives in Nigeria, Kenya and other nations, Africa continually generates the kind of headlines that make Westerners uneasy. And in the U.S. in particular, the continent barely appears on investors’ radar screens. David Snowball, publisher of the Mutual Fund Observer newsletter, estimates that only about 0.3% of the average portfolio in the U.S. — just $3 out of every $1,000 — is invested in Africa.
But more fund managers and economists believe it’s time for that to change. With a lot of factors falling into place at the same time — rapid economic growth, unprecedented political stability, and a young and increasingly middle-class population — the continent could be at the foothills of a promising upturn.
For investors with steady nerves, the bulls say, Africa offers an opportunity to reap a better return than they would in the “old” emerging markets — an opportunity to cash on greater growth than they can expect from, say, the BRICs or the MINTs. While economic growth and a rising stock market don’t always occur in tandem, some investors see the two creating a virtuous cycle in Africa.
“We believe that Africa could be the ‘emerging market’ story of the next decade,” said Mark Mobius, executive chairman of Templeton Emerging Markets Group and manager of the Templeton Africa Fund, in emailed comments.
Source : MarketWatch