Africa is becoming an increasingly ‘sticky’ in vestment destination for international investors, who no longer cut and run due to local difficulties or when the Western media focus on bad news.
The steadfast nature of international investors in Africa was spotlighted by STANLIB, South Africa’s leading asset manager and the company responsible for the Dublin-domiciled Standard Africa Equity Fund. ‘ Since its launch in August last year, the Africa-wide fund has attracted inflows of more than US$250 million while achieving a dollar-denominated return of 23.50%.
Inflows were maintained throughout the Kenya crisis and a dip in performance on East African equity markets. ‘Stickability’ was maintained even though there are no penalties for early fund exit. There are no lock-in periods.
Stephane Bwakira, Johannesburg-based manager of the fund, commented: “Not one of our investors blinked as Kenya’s political crisis played out. There was only one query. None of the major investors showed any sign of nerves. This indicates that international investors not only appreciate Africa’s low correlation with major centres, they are also aware of low correlation between individual jurisdictions within Africa.”
“Each is affected by distinct dynamics. A glitch in one market is not a symptom of a wider malaise,” Bwakira said.
He said it was apparent that the new generation of investors in Africa was well informed and had made a strategic commitment that won’t come unstuck every time an individual jurisdiction has to deal with a local setback.
Gains by the Standard Africa Equity Fund are three times higher than the 8.02% gain recorded over the same period by the MSCI Global Emerging Markets Index.
The STANLIB portfolio currently contains shares in 48 companies across six industry sectors in nine African countries. The mandate permits investment in up to 16 African equity markets.
Analysts said Africa’s potential for generating high rates of return not only attracted “first movers” with a big appetite for risk, West European pension funds were also showing also growing interest.