Article DetailsAfrica: The best investment destination of the 21st Century |
| Date Added: December 05, 2009 11:59:08 AM |
| Author: Ian Brown |
| Category: |
The wall of money coming into Africa reflectes both genuine reforms and a global hunt for higher yields as investors weigh up the relative risk of investing in Africa or intangible, complex financial securities and derivatives. Bankers gathered in Shanghai in May of this year for the annual meeting of the African Development Bank. Confidence was high given that the past four years of above trend economic growth has triggered a strong interest from Lodon based equity and fund managers. Convinced that the continents dominant economies are turning a corner funds listed on AIM, mutual funds, private equity and hedge funds are pouring in to Africa. To put things into perspective, the U.K. & America are falling behind the competition when it comes to investing in the continent. China, India, Russia and much of the Islamic world are already there. In July 2006, for example, Beijing used $US5 billion from its reserves to form the Africa Development Fund to develop the continent's oil and mineral resources. Looking at the current turmoil in the markets, one wonders if China isn't on to something when it comes to weighing up the relative risk of politically unstable Africa versus intangible, complex financial securities and derivatives. Chinese, Indian & Russian demand for natural resources has helped fuel a boom in commodities which Africa has in large supply & the promise of a massive programme of investment in infrastructure. Africa's fringe position in the global economy is contributing to it's appeal. The correlation between African equity markets & other regions is low, offering opportunities to reduce portfolio risks at a time of global volatility profits generated by commodities are causing sustainable growth in Africa. |
