Global conglomerates are taking their business to the frontier markets of Africa, seeking out areas of promise and potential high returns. The added boost in economic activity could help benefit Africa-related exchange traded funds (ETFs).
Leading international business have started to plant regional head offices in Nairobi, Kenya for the wider East and Central Africa area, reports Paul Wafula for Business Daily. Most companies are leap-frogging from their Middle East and Asia or Northern Africa and Mediterranean offices. [Investing in the Last Frontier With Africa ETFs.]
More recently, Global Visa International and Panasonic will join other companies that have already established themselves in the region, including Nokia Siemens Networks, Airtel, Nestle and PepsiCo.
Interest in high-return frontier markets has increased recently as investors in developed countries find ways to balance and diversify investment portfolios. Abiola Rasaq, analyst at Vetiva Capital Management, has commented that the short-term effects of the S&P’s downgrade on the U.S. outlook, economic issues in Japan and growing concerns over possible bubbles in China could attract greater investor interest in emerging Africa markets, according to BusinessDay.
For more information on Africa, visit our Africa category.
- Market Vectors Africa Index (NYSEArca: AFK). AFK tries to reflect the Dow Jones Africa Titans 50 index, which contains the broadest exposure to Africa.
- iShares MSCI South Africa Index (NYSEArca: EZA). EZA is based on the MSCI index for South Africa, which is the most developed of all African economies.
- PowerShares MENA Frontier Countries Portfolio (NYSEArca: PMNA). PMNA provides exposure to North Africa and the Middle East.
Max Chen contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.