New indices to spur Africa investment

16 October 2009

With Africa increasingly seen as a key market of the future, Nedbank has launched three Africa indices to help investors tap into opportunities on the continent while containing the inherent risks.

Growth forecasts for the continent by the International Monetary Fund and the World Bank are among the strongest in the world, while recent research from the Economist Intelligence Unit finds that out of the 20 fastest-growing countries, 15 are African, Nedbank said in a statement earlier this month.

This growth is reflected in the increase in the number of African stock markets – up from just a few in 1983 to 20 today, backed by strong equity price gains due to fast-growing economies.

“Investors broadening their horizons into Africa need comprehensive, replicable and transparent indices, which measure the performance of the major geographical and economic segments,” Nedbank Capital’s Nerina Visser said at the bank’s Africa Investor Conference earlier this month.

Visser said such indices would need to provide investment managers with a legitimate benchmark and, as such, would have to ensure that performance was not skewed to predominant markets such as Egypt and Nigeria.

“Equally important, the indices have to be investable to the extent that its performance should be replicable within reasonable limits, with specified minimum market cap and liquidity criteria and limits on exposure to individual stocks, specific markets and sectors,” she said.

Africa Equity Index Series

Specifically designed for investors looking for ways to invest in the continent, the Nedbank Africa Equity Index Series, representing the performance of a broad-based range of African companies, encompasses all these requirements.

Primarily providing performance benchmarks, the Africa Equity indices ensure that the heterogeneous nature of the wide range of African equities, markets and countries are captured.

The series includes two indices:

  • The All Africa ex South Africa 100 (AAXSA-100) Index consists of the 100 top listed equity counters of 13 African stock exchanges, namely Botswana, Bourse Regionale des Valeurs Mobilieres (BRVM), Egypt, Ghana, Kenya, Malawi, Mauritius, Morocco, Nigeria, Tunisia, Uganda, Zambia and Zimbabwe.

  • The Sub-Saharan ex South Africa 50 (SSAXSA-50) index consists of the 50 top listed equity counters of 10 Sub-Saharan African stock exchanges. It covers the same as the above, but excludes Egypt, Morocco and Tunisia.

The two indices offer investors broad-based exposure to the largest, most liquid companies listed on stock exchanges in Africa, combined with the ability to capture new emerging markets in their early stages. It also creates a basis for structuring tradable products to provide access to Africa’s most exciting investment opportunities.

African Mining Index Series

With a third of the world’s natural mineral resources on African soil, investors also require solutions that allow them to access African mining and exploration opportunities.

To provide investors with a measure of the performance of energy, metals and mining producers operating on the continent, Nedbank Capital has launched the Nedbank African Mining Index Series, which accommodates six different commodity classes – diversified metals and mining, gold mining, platinum group metals, base metals, energy and other mining and minerals – and differentiates between major and junior producers.

“One of the most attractive features of this range of indices is that it covers all listed commodity producers that operate primarily on the African continent, irrespective of the domicile of the stock exchange listing,” says Nedbank.

As a result, investors can gain access to an attractive selection of African metals and mining operations via first world financial markets – London, Sydney, Toronto, New York and Johannesburg.

“Placing investors at the forefront of the African Renaissance, the Nedbank range of African indices provides investors with an all-round solution to broadening their horizons into Africa.”

SAinfo reporter

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