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Booming Africa Could Be the New Asia

Friday, 12 Sep 2008 09:33 AM

Africa is emerging as a great investment opportunity, similar to 1980s Asia, say some money managers.

"If you look at (macro-level) risk, it compares to China in 1984," Charl Malan, head of African research for Van Eck Global, told The Wall Street Journal.

Van Eck Global launched the first African Index ETF in July.

"If you think the commodities cycle is unsustainable, then why is Africa sustainable? This time there's a whole range of growth initiatives put into place by various African leaders," says Malan.

According to the Journal, the International Monetary Fund published a statistical comparison between a current basket of sub-Saharan African economies, including Ghana, Kenya, and Nigeria, and a snapshot of the Association of Southeast Asian Nations from 1980.

In terms of gross domestic product expansion, money supply, and debt-market growth, the African nations compare "favorably."

In a January research note entitled "Africa Rising," Goldman Sachs initiated coverage of sub-Saharan Africa separate from South Africa, with some 15 stock markets with 500 tradable stocks led by Nigeria, with its immense oil resources.

Three of the top 10 fastest-growing nations in the world for 2006 were in Africa, Goldman wrote.

There are risks, of course, Goldman wrote, but the investment bank is confident that growth will continue.

Other areas of Africa are emerging as financial centers, including Egypt, Kenya and Ghana. The Ghana Stock Exchange All-Share Index, for example, was up 63 percent for the year-to-date, as of September 2. Gold mining and stakes in other commodities led the advance.

As the predicted African boom takes shape, Wall Street brokerage firms, fund managers, and private equity traders have been quietly moving investment money into a variety of African markets and enterprises where prospects seem good.

According to the Journal, in the past 18 months, Russian investment bank Renaissance Capital has hired about 120 people in various African nations to coordinate an effort in that area.

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Africa is emerging as a great investment opportunity, similar to 1980s Asia, say some money managers."If you look at (macro-level) risk, it compares to China in 1984," Charl Malan, head of African research for Van Eck Global, told The Wall Street Journal.Van Eck Global...
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2008-33-12
Friday, 12 Sep 2008 09:33 AM
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