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Alternative Market Briefing

The Big Picture: African equity returns expected to be driven by earnings growth rather than re-ratings

Monday, March 24, 2014

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Fatima Vawda
Benedicte Gravrand, Opalesque Geneva:

As frontier markets continue to outperform emerging markets, a fund manager, who is riding this promising wave by investing in African equities, explains what is driving economic growth in Africa (excluding South Africa), and gives a short and long term outlook for this market.

The Pangaea Africa Fund of Funds is an equity Fund launched in June 2011 by 27four Investment Managers, a firm based in Johannesburg, South Africa, named after a date, 27 April 1994, when South Africa saw its first democratic election. It invests in five to ten Africa (ex South Africa (S.A.)) focused mutual funds at any one time.

Frontier markets continued to outperform emerging markets in 2013, a trend seen in the second half of 2013 when US Fed taper talk saw emerging market (EM) currencies weaken substantially while most frontier market currencies held firm. Africa (ex S.A.) was the best performing frontier region for the last quarter of last year, driven by Egypt, and for the year 2013, sub-Saharan African markets had the best performance, after a strong 2012. From the beginning of 2012, these markets have returned 86% as measured by the MSCI FM Africa Index (54% in 2012, 31% in 2013, and currently down -7% YTD).

Economic growth view According to 27four, over t......................

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