Although often stereotyped as a poor and poorly governed continent, Africa is clearly outgrowing the developed world in terms of GDP. Frontier stock markets in North and Sub-Saharan Africa have long been disregarded by investors. Hidden pearls with the potential to deliver stellar returns.
Investment Case Africa
Africa – new terrain for investors
Africa is falsely reduced to poverty, misgovernment and corruption. The truth is, however, there has been much change for the better across this huge continent. Economic dynamics are manifold and robust. Africa's aggregate gross domestic product has been expanding by more than 5% p.a. after inflation, outpacing the GDP growth of industrialized countries. Average per capita income, a highly relevant macroeconomic indicator, is also rapidly increasing. Africa’s GDP per capita growth rate is now the third fastest in the world, behind China and India. And both the World Bank and the IMF project a continuation of this growth trend in the coming years. Declining levels of debt, well-contained inflation, growing foreign currency reserves and investment in infrastructure are creating new dynamics across Africa. Particular mention is made of innumerous micro reforms that are enhancing regional growth prospects. Examples of micro reforms are the deregulation of the telecommunications sector in North and Sub-Saharan Africa and various initiatives to promote local manufacturing activity.
Infrastructure – the key to progress
The quality of a developing country’s infrastructure will clearly impact how quickly it can grow its way out of underdevelopment. Many African countries are experiencing a boom in precisely this area – investment in base infrastructure is rapidly growing. Investment activity is focused on energy and water supply, telecommunications, housing construction, roads, railway lines, airports and shipping ports. Exactly the infrastructure that is needed for sustainable development.
Commodities – a curse and a blessing
Low commodity prices are not entirely negative for Africa. While commodity exporters such as Nigeria and Angola are confronted with growing budget deficits, a weaker domestic currency, declining consumption and receding investment flows because of the steep fall in commodity prices, countries in East Africa that import raw materials have benefited. They have more money to spend on other areas instead. Africa's huge deposits of raw materials are an opportunity and a risk at the same time. Investment opportunities are exposed to the typical cyclical forces, and they must be taken into consideration during the investment process.
Stock markets waiting to be discovered by the mainstream
Africa's political and business elite are young and well educated. Long-term structural growth opportunities are beckoning them. These opportunities are becoming more evident in North and Sub-Sahara Africa, regions that have long been shunned by investors. If the reform efforts witnessed thus far continue, Africa experts expect above-average long-term growth to result, especially in the countries of North Africa and Sub-Saharan Africa. This is particularly true in non-commodity sectors of the economy, for example, in the banking, insurance, telecommunications and construction sectors.
The emerging stock markets in North Africa and Sub-Saharan Africa were long neglected by investors and yet modern stock exchanges have been established in these countries in recent years. Meanwhile share prices on these exchanges are not determined by international capital flows but by local investors. Consequently, market performance can show a high degree of autonomy. Investing in regional markets therefore offers substantial diversification benefits. That said, investments in emerging markets are known to be subject to higher levels of volatility and temporary downturns. Africa is thus most suited as a component of portfolio diversification. Investors should have a multi-year investment horizon.
Our team has close personal ties with Africa. They visit the continent on a regular basis and maintain close contact with local officials, business leaders and local brokers and they put this knowledge advantage to good use. Our highly experienced portfolio managers have African roots, they speak the local languages and they are familiar with the respective cultural, economic and political nuances. This gives them a profound understanding of the African investment theme and that is imperative to comprehend the complex interplay of the many factors involved.
Team Africa Strategies
Dr. Malek Bou-Diab, Lead Portfolio Manager
- Since 2009 with Bellevue Asset Management as lead portfolio manager of the BB African Opportunities (LUX) Fund
- 2007 - 2009 Julius Baer Asset Management, portfolio manager of JB Northern Africa and Nikko Africa Funds
- 2003 - 2007 Deutsche Bank, London, quant risk analyst
- PhD in Theoretical Physics, Swiss Federal Institute of Technology (ETH) Zurich
Andy Gboka, Portfolio Manager
- Since 2015 with Bellevue Asset Management as Analyst / Portfolio Manager of the BB African Opportunities Fund
- 2011–2014 Exotix LLP, Senior analyst covering the brewers and cement companies listed in Africa
- 2008–2011 Societe Generale Corporate and Investment Banking, Equity analyst in the European utilities team covering the regulated sector
- Msc specialised in Finance, Bordeaux Business School, now Kedge Business School since the merger with Euromed Marseille in July 2013
Jean-Pierre Gerber, Product Specialist
- Since 2009 with Bellevue Asset Management as senior product specialist
- 1999 - 2009 Julius Baer Asset Management, head fund research, equity product specialist
- 1996 - 1999 Ernst&Young, business audit and consulting
- Master's degree in Business Economics following studies at the University of Berne and University of Warwick, UK
Our investment solutions
The BB African Opportunities Fund was launched in 2009 as a vehicle for investing in Africa’s emerging markets. Experts from the region manage the portfolio with a focus on North and Sub-Saharan Africa.
BB African Opportunities (Lux)
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Markets & Opinions / 07.03.2018
Malek Bou-Diab about the development of the egyptian company ElSewedy.
Markets & Opinions / 04.04.2017
Market commentary by Malek Bou-Diab.
Markets & Opinions / 13.10.2016
Portfolio Manager Malek Bou-Diab recently met with the finance minister of Egypt. Read his update.
Markets & Opinions / 10.08.2016
Portfolio Manager Malek Bou-Diab interviewed by Citywire.