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Access to Africa’s investment opportunities
05 October 2009
Africa is increasingly regarded as the market of the future as investors awaken to the lucrative opportunities for higher yields its diverse markets offer. Earlier this year, TIME magazine included 'Africa: a business destination' in its '10 ideas changing the world right now'. The World Economic Forum’s (WEF) Africa Competitiveness Report 2009 notes that Africa has experienced an economic resurgence over the past decade with impressive growth rates consistently exceeding the world average.
Growth prospects expected by the IMF and the World Bank are among the strongest in the world. Research from the Economist Intelligence Unit confirms that out of the 20 fastest-growing countries, 15 are African. This rapid growth is reflected in the increase in the number of African stock markets – up from just a few in 1983 to 20 today, backed by strong equity price gains due to fast-growing economies.
But how do investors tap into the opportunities on this continent, while containing the inherent higher risk? Nedbank Capital has created innovative solutions with three African index series, launched at its Africa Investor Conference on 5 and 6 October. The indices will be carried by the major data vendors.
“Investors broadening their horizons into Africa need comprehensive, replicable and transparent indices, which measure the performance of the major geographical and economic segments,” says Nerina Visser Head of Beta Solutions at Nedbank Capital.
“Such indices need to provide investment managers with a legitimate benchmark and, as such, must ensure performance is not skewed to predominant markets such as Egypt and Nigeria. Equally important, the indices have to be investable to the extent that its performance should be replicable within reasonable limits, with specified minimum market cap and liquidity criteria and limits on exposure to individual stocks, specific markets and sectors.”
Specifically designed for investors looking for ways to invest in the continent, the Nedbank Africa Equity Index Series, representing the performance of a broad-based range of African companies, encompasses all these requirements. Primarily providing performance benchmarks, the indices ensure the heterogeneous nature of the wide range of equities, markets and countries are captured.
The series includes two indices. The All Africa ex South Africa 100 (AAXSA-100) Index consists of the 100 top listed equity counters of 13 African stock exchanges, namely Botswana, Bourse Regionale des Valeurs Mobilieres (BRVM), Egypt, Ghana, Kenya, Malawi, Mauritius, Morocco, Nigeria, Tunisia, Uganda, Zambia and Zimbabwe. The Sub-Saharan ex South Africa 50 (SSAXSA-50) index consists of the 50 top listed equity counters of 10 Sub-Saharan African stock exchanges. It covers the same list mentions previously but excludes Egypt, Morocco and Tunisia. Both indices are subject to the constraints mentioned previously.
The two indices offer investors broad-based exposure to the largest, most liquid companies listed on stock exchanges in Africa and the ability to capture new emerging markets in the early stages. It also creates a basis for structuring tradable products providing access to Africa's exciting investment opportunities.
With a third of the world's natural mineral resources on African soil, investors also require solutions that allow them to access African mining and exploration opportunities.
To provide investors with a measure of the performance of energy, metals and mining producers operating on the continent, Nedbank Capital launched the Nedbank African Mining Index Series (NAMI series). It accommodates six different commodity classes - Diversified Metals and Mining, Gold Mining, Platinum Group Metals, Base Metals, Energy and Other Mining and Minerals - and differentiates between Major and Junior producers. Designed as both performance benchmarks and investable products, the indices are available for all categories of producers and commodities, as well as combinations thereof. One of the most attractive features of this range of indices is that it covers all listed commodity producers that operate primarily on the African continent, irrespective of the domicile of the stock exchange listing. As a result, investors can gain access to an attractive selection of African metals and mining operations via first world financial markets – London, Sydney, Toronto, New York and Johannesburg.
A performance benchmark providing greater visibility for South Africa’s developing mining sector, the Nedbank South African Junior Mining and Exploration Indices (NSJME), as well as a derivative version of the index, was launched in 2006. Currently carried by I-Net, BFA-McGregors and Reuters, among others, the NSJME tracks all mining companies, excluding oil and gas, listed on all the JSE’s boards and sectors, excluding Top40 Index constituents (or those that would normally be constituents barring liquidity issues) and companies controlled by other JSE-listed companies. A full history of the index for capital gain and total return indices, as well as dividend yields, has been calculated since June 1995. Satisfying Reserve Bank forex regulations, the Nedbank South African Junior Mining & Exploration Index Excluding Dual Listed Shares (NSJMEX) excludes all inward dual-listings from the eligible constituents. These indices have primarily been designed as performance benchmarks and due to low liquidity they are not recommended for use as investable products.
Placing investors at the forefront of the African Renaissance, the Nedbank range of African indices provides investors with an all-round solution to broadening their horizons into Africa.
ENDS| For further information: | |
| Contact: | Kerri Savin Senior Communication Manager – Nedbank Capital Tel: +27 11 295 5672 Cell: +27 82 672 7571 E-mail: Kerris@nedbank.co.za |
| This page was updated on 7 October, 2009 |  Return to top |
