South African markets are growing, and once the country irons out its infrastructure problems, its exchange traded fund (ETF) could begin seeing consistently strong performance.

For now, power outages continue to plague the country and interrupt its major industries – mining, in particular. While the latest two-day crisis has been resolved, according to Gordon Bell for Reuters, rolling blackouts would still continue. The state electricity firm, Eskom, plans to spend $43 million in the next five years and $163 billion until 2025 to increase its generating capacity.

Since the near-collapse of the grid in January, South Africa’s mines haven’t been operating at full power, driving up precious metal prices and raising fears of job losses and slowed growth.

The iShares MSCI South Africa (EZA) is down 8.2% year-to-date. If South Africa commits itself to improving its infrastructure and, in turn, increasing the productivity of one of its major industries, this fund may be one to watch. Particularly since most of the fund is allocated in the energy and industrial sectors.

Dave Mock for Motley Fool explores the country’s situation. South Africa is generally regarded as a developing nation, but it has its own set of circumstances that leaves it off the lists that include China, India and Brazil. Half of its population is unemployed, and the life expectancy is nearly half of that of the average American.


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.