News
Fund Managers See Africa as
Next Investment Hotspot: Survey
Global institutional investors plan to boost their asset
allocation in African markets over the next five years, and are
shifting to long-term investment strategies from more
speculative, short-term bets, a survey showed.
Africa's frontier markets -- the smallest, less developed and
less liquid among emerging economies -- will offer the best
overall prospects for investment growth in the next decade, said
51 percent of the 158 investors polled by Invest AD and the
Economist Intelligence Unit (EIU).
Two-thirds of investors with an interest in frontier markets see
Nigeria or Kenya holding the greatest opportunity, putting the
continent ahead of frontier markets in Asia and Latin America,
the survey showed.
Even among frontier markets investors, most are only just
starting to explore African markets, with one in five of those
surveyed having zero allocations. Among larger investors with
more than $10 billion under management, this is closer to one in
three, according to the survey.
By 2016, however, all expect to have some exposure to emerging
Africa, with nearly one-third expecting to shift at least 5
percent of their fund value there.
In terms of popularity with investors, Nigeria and Kenya top the
list, followed by Zimbabwe, Egypt, Ghana and Libya.
THE NEXT ATTRACTION
Investors eye Africa's emerging middle class as the most
attractive aspect of the continent, which until now has been a
largely natural resources play.
"Interestingly, the Invest AD-EIU survey suggests that investors
are largely drawn by the same "income convergence" story that
has played out in China and India -- not the worn,
one-dimensional motivation of mineral extraction," Nazem Fawwaz
Al Kudsi, chief executive office at Invest AD, said.
Still, institutional investors have several concerns about
investing in the continent, according to the report titled "Into
Africa: Institutional Investor Intentions to 2016."
"Africa's biggest challenge is to overcome deeply entrenched
perceptions. But a striking shift that can be observed among
investors is a change in focus from macroeconomic and political
worries towards more technical market concerns," according to
the report.
Although bribery and corruption is the headline worry for
investors, concerns about weak institutions and illiquidity in
capital markets are not far behind
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