5 Reasons To Invest In Africa – Specialized Advice From CWIIL Group

African equity exchange-traded funds (EFT) have soared over the past year, as the resource-rich continent is growing quickly, with low debt levels and a youthful and increasingly middle class demographic, but there are near-term risks to consider.

Global consultancy Ernst & Young believes Africa is the second-most-attractive investment destination, behind the U.S. According to Arthur Childs from advisory firm Arch Financial Planning, a number of asset managers believe Africa should be part of a mainstream equity portfolio for long-term investors. In a note to clients, he gathers five points from asset managers Alquity and Neptune Investment Management to state why investors should take note of this continent.

1. Africa has an Exciting Resource Story

Africa has rich resources in oil, natural gas, minerals, food and arable land. It has a land mass equivalent to Europe, the U.S, India, China and Argentina combined. Non-oil output is also expanding thanks to reforms in the energy sector.

2. Expanding Economy

The International Monetary Fund predicts that seven out of 10 of the world’s fastest-growing economies between 2011 and 2015 will be in Africa. Many sub-Saharan countries’ growth is predicted to rise from 5 to 5.5 percent per year as they emerge from the financial crisis.

3. Low Debt Levels

Africa has better debt to GDP levels than some developed countries. Alquity said that while the U.K.’s debt level is 77 percent, Nigeria’s is just 16 percent.

4. Growing Workforce

Africa is enjoying a growing middle class and a youthful workforce, already equivalent to that of India. A growing consumer base will also be a positive for the economy.

5. Low Correlation to Other Markets

Africa is relatively uncorrelated to developed and emerging equity markets, with a correlation of 0.27. According to Alquity, stocks are more driven by domestic factors. However, if China has a slower landing than expected, there will be weaker demand from African exporters and a knock-on effect on commodity prices.

Looming Risks

However, there are near-term risks in Africa to consider, including the rolling out of tighter monetary policy. An inflation target and more exchange rate flexibility is needed. There is also a vulnerable greater fiscal debt situation, especially in the countries that rely on foreign capital inflows.

Arthur Childs warned that only clients with a higher risk appetite and a long-term horizon should consider investing a maximum of 3 to 6 percent of their portfolio in Africa.

“It will hopefully be clear from what has been said that investors with a very cautious attitude to risk or whose capacity for loss is small should not consider investing any of their money in an Africa fund, or indeed in an emerging market fund,” Childs wrote.

These materials are not intended and should not be used as legal / investment advice or other recommendation. If you need a legal / investment opinion on a specific issue or factual situation, please contact a lawyer / investment advisor. Anyone using these materials should not rely on them as a substitute for legal / investment advice.

Remember, no problem has a quick fix solution. Thus, always ensure to consult highly knowledgeable group of professionals whom would provide you with a collective advice, never individual advice. This group advice and approach is unique with CWIIL Group and is based on the overall Management Philosophy of all CWIIL Group Companies.

Consulting CWIIL Group of Companies, for any / all investment matters ensures advice based on highest level of knowledge which are given to you by a team of select research-oriented experts whom each will do their own assessment of your matter, and also assess it together, thus ensuring that in case a mistake has been made by one, it will be noticed and corrected even before it is being passed on to you. Receiving incorrect and un-knowledgeable investment advice can be disastrous and thus should be avoided.

CWIIL Group of Companies is a global group of multi-specialized units with diversified interests and activities, wherein each company is a separate legal entity registered under prevailing laws in different parts of the world. CWIIL Group of Companies Products, Services, Project and Solutions are in a multitude of Verticals including, but not limited to, Infrastructure, Power, Oil & Gas, Legal, Media, Technology, ITES, HR, Shipping, Aviation, Real Estate, Hospitals, Health and Medicine, Education, Funding & Investment, Business and Legal Consultancy, and Public Private Partnerships, and other CWIIL Group Units, worldwide, to name a few.

For Further Queries or to Request a Personal Quote Feel Free to Contact :

Mr. Francis Thomas Matthews,
Deputy Global Director, No. 8
Marketing Research & Development Division,
Email : deputy.gd.8@cwiilgroup.eu
Voice : +45.8176.1924
Connect : LinkedIn I Twitter I Facebook I Tumblr

For Queries Specific to Africa :
Email: africa@cwiilgroup.comhq@cwiilgroup.eu
Web: www.cwiilgroup.comwww.cwiilgroup.eu

For Any / All Other Queries :
CWIIL Group Global Regional Headquarters Denmark,
Address : No. 1, Klokkebjergevej, DK6900 Skjern, Denmark
Voice : +45.5148.3608
Fax : +45.7014.1498
Email : corpcomm@cwiilgroup.eu
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