Just to make things clear upfront, as there are many South Africans on this mailing list, I am not at all bullish South Africa. However, I am bullish on some of the more dynamic African frontier stock markets south of the Sahara.
I explained my rational in this article I wrote last year “Why I invested in the stock market in Africa“. If you haven’t read it already, I strongly recommend you do.
I lived, worked, and travelled all over Africa for 7 years. I spent most of my twenties there.
My last “real job” was managing a $90 million business for Nestlé, the Swiss food company. I sat on the executive board of Nestlé Ghana, and was in charge of the dairy business for a few West African countries.
I also invested in real estate on the continent, and recently made a private investment in a chicken and egg distribution business in a small West African country.
But barely anyone on this list is interested in Africa
People who join The Wandering Investor’s private list are typically interested in investing in frontier and emerging markets, alternative investments, or immigration to developing countries with better tax rates and/or lifestyle.
You’d think content on high-growth, niche frontier markets would have such people interested. But whenever I create content on African stock markets, people just brush it off. I did a few interviews with Tim in the past, and generally very few people sign up to his mailing list or contact him to inquire about his fund.
This makes me bullish
One of the key features of such African frontier stock markets is that they have very little liquidity. So a bit of foreign money coming in can seriously move prices.
This is a long term investment for me
I see this investment I made in his fund as long term retirement money. I don’t mind institutional investors not having noticed the continent yet because I get to accumulate cheap in spite of fundamentals in some markets being very interesting.
– Tanzania offers interest rates of 15% and has inflation of 4%. Compare this with inflation of 7% in the US, and interest rates of 0%. The situation is similar in Europe. Spain’s YoY Price Producer Index (PPI) came in at 36% for December (a 5 decade high). Tim is accumulating positions in Tanzania that have very little debt on their balance sheets, that are growing double digits every year, and that pay double digit dividend yields.
– Senegal is expected to grow a strong 5.5% in 2022, and then 10% in 2023 and 2024 on the back of surging gas production. Tim is accumulating a position in the country’s largest telecommunications company which pays double digit dividend yields as well.
But it’ll be a volatile ride. I accept it.
I suggest you watch the conversation I had with Tim (here), in which I question him on the outlook for African frontier markets for 2022.
Make sure to subscribe to Tim’s Africa investment newsletter here. It’s free and insightful.
People often ask me if IB, my favourite broker, gives access to such African frontier stock markets. Unfortunately it doesn’t. In my opinion it’s the best broker out there for international stocks, but no online broker covers such frontier stock markets.
To a World of Opportunities,
The Wandering Investor
Other articles on Africa:
- Making a Real Estate Investment in Kenya, a smart move?
- 5 Reasons why I decided to invest in the Stock Market in Africa
- Cheap, Chinese-built Real Estate in Nairobi, Kenya – A Good Investment?
- Has the Stock Market in Kenya bottomed?
- 9 Reasons why the economy in South Africa is on the verge of a crash
If you want to discuss your internationalization and diversification plans, book a consulting session* or send me an email.
*a consulting session is a discussion about your portfolio and objectives. It does not constitute legal, financial, tax or investment advice.