African stocks offer untapped opportunities
BOSTON — If there's a last frontier for U.S. investors, it's Africa. The world's second-most-populous continent is an afterthought for anyone looking to construct a diversified portfolio of foreign stocks.
Consider that there are just two mutual funds specializing in African stocks, compared with more than 100 focusing on Europe. About three-dozen focus on China. So much for the vast African continent and its underground wealth from oil, minerals and metals.
Another sign of Africa's low profile is the dearth of information about the stocks of its top publicly traded companies. Check the business pages of a newspaper or an investing website, and it's relatively easy to find data on the performance of indexes from most foreign countries or regions. But you'll probably have to look elsewhere to find references to the few African indexes, such as the MSCI Emerging Frontier Markets Africa or the Dow Jones Africa Titans 50.
“It's probably the world's last great untapped market,” says Derrick Irwin, co-manager of the Wells Fargo Advantage Emerging Markets Equity fund (EMGAX).
In a recent interview at his Boston office, Irwin discussed the risks and rewards of investing in Africa. Here are excerpts:
Q: What are Africa's key strengths, from the standpoint of U.S. investors?
A: There's huge growth potential. The top five African economies have more than 400 million people. Across sub-Saharan Africa there are more than 425 million cellphone subscribers.
Q: As an American consumer, I don't see any African brand names on the shelves, or any visible indications that African companies have a substantial presence in the global economy. Am I missing something?
A: It's there, it's just that Americans don't see it. A lot of the trade with African countries is with other emerging markets in places like China, India and Turkey. That trade has increased about tenfold over the past decade.
Q: What advice would you offer to an investor looking for specific exposure to African stocks?
A: You can't just rely on the financial statements that companies issue. You have to understand how these businesses operate, and where the opportunities are. It's probably more important in Africa than anywhere else to spend time on the ground, kicking the tires. It takes so much due diligence if you're investing directly in Africa, rather than through a mutual fund.
Mark Jewell is a Personal Finance Writer for the Associated Press. Email him at firstname.lastname@example.org
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- Large-scale batteries are integral in shift to renewable energy
- Plastics, tech sectors crucial to cracker plants
- Natural gas industry tries to find uses for abundance of product from shale drilling
- Energy Spotlight: Steve Anthos
- Hackers rip into heart of open-source software
- Student loan debt presents paradox
- Open enrollment puts varied impact of health care law back in focus
- EDMC loses $664M; executives receive six-figure bonuses
- Universal theme park swings into Beijing
- 113 Federal Reserve staffers earn more than chief Yellen
- Without pipelines, gas can’t get to demand