Best of the Week
Most Popular
1. TESLA! Cathy Wood ARK Funds Bubble BURSTS! - 12th May 21
2.Stock Market Entering Early Summer Correction Trend Forecast - 10th May 21
3.GOLD GDX, HUI Stocks - Will Paradise Turn into a Dystopia? - 11th May 21
4.Crypto Bubble Bursts! Nicehash Suspends Coinbase Withdrawals, Bitcoin, Ethereum Bear Market Begins - 16th May 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.Cathy Wood Ark Invest Funds Bubble BURSTS! ARKK, ARKG, Tesla Entering Severe Bear Market - 13th May 21
7.Stock Market - Should You Be In Cash Right Now? - 17th May 21
8.Gold to Benefit from Mounting US Debt Pile - 14th May 21
9.Coronavius Covid-19 in Italy in August 2019! - 13th May 21
10.How to Invest in HIGH RISK Tech Stocks for 2021 and Beyond - Part 2 of 2 - 18th May 21
Last 7 days
Stock Market Rescued by the Fed Again? - 24th Sep 21
Are Amazon Best Cheap Memory Foam Mattresses Any good? Bedzonline £69 4ft Small Double ECO Example - 24th Sep 21
Evergrande not a Minsky Moment - 24th Sep 21
UK Energy Firms Scamming Customers Out of Their Best Fixed Rate Gas Tariffs - 23rd Sep 21
Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Should School Children be Jabbed with Pfizer Covid-19 Vaccine To Foster Herd Immunity? - UK - 23rd Sep 21
HOW TO SAVE MONEY ON CAR INSURANCE - 23rd Sep 21
Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
Trading Crude Oil ETFs in Foreign Currencies: What to Focus On - 22nd Sep 21
URGENT - Crypto-trader event - 'Bitcoin... back to $65,000?' - 22nd Sep 21
Stock Market Time to Buy the Dip? - 22nd Sep 21
US Dollar Bears Are Fresh Out of Honey Pots - 22nd Sep 21
MetaTrader 5 Features Every Trader Should Know - 22nd Sep 21
Evergrande China's Lehman's Moment, Tip of the Ice Berg in Financial Crisis 2.0 - 21st Sep 21
The Fed Is Playing The Biggest Game Of Chicken In History - 21st Sep 21
Focus on Stock Market Short-term Cycle - 21st Sep 21
Lands End Cornwall In VR360 - UK Holidays, Staycations - 21st Sep 21
Stock Market FOMO Hits September CRASH Brick Wall - Dow Trend Forecast 2021 Review - 20th Sep 21
Two Huge, Overlooked Drains on Global Silver Supplies - 20th Sep 21
Gold gets hammered but Copper fails to seize the moment - 20th Sep 21
New arms race and nuclear risks could spell End to the Asian Century - 20th Sep 21
Stock Market FOMO Hits September Brick Wall - Dow Trend Forecast 2021 Review - 19th Sep 21
Dow Forecasting Neural Nets, Crossing the Rubicon With Three High Risk Chinese Tech Stocks - 18th Sep 21
If Post-1971 Monetary System Is Bad, Why Isn’t Gold Higher? - 18th Sep 21
Stock Market Shaking Off the Taper Blues - 18th Sep 21
So... This Happened! One Crypto Goes From "Little-Known" -to- "Top 10" in 6 Weeks - 18th Sep 21
Why a Financial Markets "Panic" May Be Just Around the Corner - 18th Sep 21
An Update on the End of College… and a New Way to Profit - 16th Sep 21
What Kind of Support and Services Can Your Accountant Provide? Your Main Questions Answered - 16th Sep 21
Consistent performance makes waste a good place to buy stocks - 16th Sep 21
Dow Stock Market Trend Forecasting Neural Nets Pattern Recognition - 15th Sep 21
Eurozone Impact on Gold: The ECB and the Phantom Taper - 15th Sep 21
Fed To Taper into Weakening Economy - 15th Sep 21
Gold Miners: Last of the Summer Wine - 15th Sep 21
How does product development affect a company’s market value? - 15th Sep 21
Types of Investment Property to Become Familiar with - 15th Sep 21
Is This the "Kiss of Death" for the Stocks Bull Market? - 14th Sep 21
Where Are the Stock Market Fireworks? - 14th Sep 21
Play-To-Earn Cryptocurrency Games Gain More and Is Set to Expand - 14th Sep 21
The CashFX TAP Platform - Catering to Bull Investors and Bear Investors Alike - 14th Sep 21
Why every serious investor should be focused on blockchain technology - 13th Sep 21
SPX Base Projection Reached – End of the Line? - 13th Sep 21
There are diverse ways to finance the purchase of a car - 13th Sep 21
6 Tips For Wise Investment - 13th Sep 21 - Mark_Adan

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Investing in Africa - First buy signal in 22 years !

Stock-Markets / Investing Jan 11, 2007 - 03:11 PM GMT

By: Money_and_Markets

Stock-Markets

Twenty-two years ago I told investors to clear out of all investments in Africa. I said, “Don't look back. Africa will not recover from colonialism and apartheid for decades.”

That was good advice. Between 1975 and 2001, Africa's per-capita gross domestic product fell an average of .7% per year. Since I issued that all-out sell signal, Africa effectively became a “lost continent.”


When apartheid fell — even though it was the best thing that ever happened to South Africa — I knew things were going to get worse before they got better. The country wasn't prepared. Its systems weren't ready for the newfound freedoms.

So even when it came to gold mining, I told investors to stay away from Africa. It didn't matter how much gold was there. The economy was so bad, political strife and corruption so intense, that I saw almost no chance of making profits in Africa.

But all that's finally changing. South Africa, in particular, is becoming a nation of growing prosperity. In 2005, the overall African economy expanded 5%, its fastest rate in decades. While 2006 figures have yet to be released, it's expected that Africa as a whole gained about 5.5% for the full year.

There's no question that Africa has a long way to go. AIDS and poverty are still mammoth issues. But I've seen enough data to convince me that things are turning around. And that's why I think Africa could soon become the next big player to enter the world's economic stage.

One reason ...

Africa Is a Direct Beneficiary Of the Global Commodity Boom

As the second largest continent on the planet, Africa covers some 11.7 million square miles and contains 53 countries. And it's also home to some of the largest deposits of natural resources in the entire world.

Together, Nigeria, Angola, Algeria and Libya produce a substantial portion of the world's crude oil. South Africa and several other African countries are a major source of the world's gold output. Botswana and Sierra Leone are major sources of diamonds.

Africa Is a Direct Beneficiary Of the Global Commodity Boom  

Africa is also home to some of the world's largest deposits of chrome, bauxite copper, manganese, and uranium. Not to mention tropical hard woods, coffee, cocoa and rubber.

All told, Africa is home to:

  • 88% of the world's platinum group metals
  • 80% of the world's manganese
  • 21% of the world's gold production
  • 26% of the world's non-OPEC oil
  • 80% of the world's diamonds

So, by my very rough estimates, the commodity boom of the last few years has beefed up Africa's balance sheet by at least $3 trillion. These huge assets now represent a highway to improvement for hundreds of millions of people.

Plus ...

China Has Been Making Big Investments in Africa

If there's one thing that bugs me about the U.S., it's the fact that Washington neglected the huge strategic importance of Africa.

Had we been there to help Africans after apartheid ended, not only would we have helped lots of impoverished people, we would have set the stage toward ensuring supplies of natural resources for the U.S.

But alas, Washington basically stayed on the sidelines. And now, while the U.S. is focused on the Middle East, North Korea and terrorism, it's missing the boat.

China, on the other hand, is locking up one deal after another in Africa. In the last two years, it's become Africa's most powerful and strategically. China has:

Forgiven more than $1 billion in debt owed by 32 African countries

Become Africa's largest trade partner, with trade growing 400% over the last six years (while Africa's trade with Britain, France and the U.S. continues to shrink)

Become the continent's largest foreign investor, recently offering $3 billion in low-interest rate loans and another $2 billion in export credits over the next three years.

Indeed, at the recent forum on Chinese-Africa Co-operation held in Beijing this past November, figures were cited showing that trade between China and Africa rose to $40 billion in 2005 from $4 billion in 1995. And Beijing authorities announced that they expect trade to rise to $100 billion over the next three years.

Moreover, in the past 12 months, at least 16 mega-contracts have been forged between Chinese firms and African governments. Four of them:

1. A copper mine in Zambia and a $230 million chrome mine and smelter in South Africa

2. A $2 billion oil-backed loan to the Angolan government

3. A $1.3 billion deal between the China Machine Building International Corporation and Zimbabwe to build a major coal mine and three power stations in the country

4. A $2.5 billion oil deal with Nigeria

To be sure, China's government, which has one of the worst human rights records, is more interested in Africa's huge natural resources than its people.

Investor Interest in Africa Is Picking Up: How You Can Invest in the Continent  

But it's a step in the right direction for Africa. With more money and foreign investment, plus huge gains in the value of Africa's gargantuan natural resources, Africa has a greater ability to make huge strides forward.

Investor Interest in Africa Is Picking Up: How You Can Invest in the Continent

Volume on the Johannesburg Stock Exchange is up 600% over the last decade. The value of listed companies on the exchange has surpassed $650 billion, making the JSE the world's 17th-largest exchange (and Africa's biggest).

As Africa's economic growth accelerates due to rising commodity prices and foreign direct investment, investor interest should rise substantially in the years ahead.

The best part is that American investors are getting more and more ways to participate:

A slew of new American Depository Receipts (ADRs) of African companies are coming out. These stocks are traded on U.S. exchanges, but are essentially the same as buying their foreign-listed counterparts.

Plus, mutual funds are allocating more capital to Africa. For example, several natural resources funds now hold significant stakes in the continent.

And exchange-traded funds are also helping investors track different countries. For example, you can purchase the iShares MSCI South Africa Index Fund (EZA). Its 52 holdings give you a broad stake in South African companies, including names like Gold Fields, Ltd ... Impala Platinum ... Anglo American ... Harmony Gold Mining ... and Sasol, Ltd, one of the leading alternative energy companies in the world today.

My view: Africa is just beginning to emerge on the world scene. It will take decades for it to come anywhere close to the level of economic development we see in, say, India, let alone the typical emerging market.

But those investors who get in now, while Africa is still largely ignored, stand to make bundles of money. It's been more than two decades since I issued my sell signal on Africa.

Now, I'm officially giving my buy signal, a green light to go ahead and start investing in Africa. I'll have more details in an upcoming issue of my Real Wealth Report .

Best wishes,

Larry Edelson

This investment news is brought to you by Money and Markets. Money and Markets is a free daily investment newsletter from Martin D. Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Dr. Weiss is a leader in the fields of investing, interest rates, financial safety and economic forecasting. To view archives or subscribe, visit http://www.MoneyandMarkets.com


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments

joanne
16 Jan 07, 22:13
Re: Investing in Africa - First buy signal in 22 years !

Its nice to see something different than the usual china and india brigade. I agree that Africa is set for solid growth given all the raw materials it has



14 Aug 07, 16:06
Africa

Interested in any info about investment opportunities in Africa for indivdual investotrs and articles that present the positive development other than emphasis on: poverty, war and aids.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in