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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: Maurice Winn who wrote (33459)	4/21/2008 11:34:11 AM
From: elmatador	Respond to of 217795

Investors undismayed by looming Africa food crisis Tue 15 Apr 2008, 14:17 GMT [-] Text [+] By Peter Apps LONDON (Reuters) - Africa may be facing serious social unrest from rising food prices that could starve its poorest, but some investors remain enthusiastic over a continent whose economic fate is increasingly tied to China not the West. Even as aid agencies sound alarm bells over an "economic tsunami" from high global food prices, several new investment tools were started this month to let investors track African equity market growth. April saw the public launch of the Duet Victoire Africa Index, a $30 million fund tracking sub-Saharan equity markets outside South Africa, while index provider Standard & Poor's launched three of their own Africa share indices. South Africa's Standard Bank has seen its Africa equity fund grown from $20 million last September to $280 million today as investors poured in cash, and is planning another $300 million African corporate debt fund. Despite recent food riots in Cameroon, Senegal, Burkina Faso, Ethiopia and Madagascar, conflicts in Sudan's Darfur, Somalia and east Congo and continuing economic chaos in Zimbabwe, some clearly see long-term rewards worth the significant risks. The International Monetary Fund (IMF) said at the weekend it saw 6.5 percent economic growth in Africa in 2008, only a marginal fall from 6.6 percent in 2007 and powered mainly by growth in oil exporting nations such as Nigeria and Angola. Africa's expected resilience is rooted in the same phenomenon causing the food crisis -- the seemingly counter-cyclical boom in energy and commodity markets. Global commodity prices have, in turn, been supercharged by demand from still-robust Asian economies, particularly China. Many investors reckon China's aggressive expansion into African mines, roads, ports and telecoms means that its economic growth will filter through to Africa almost regardless of what happens to long-dominant United States or Europe. "You look at China and Asia and they are not slowing yet," said Investec strategist Werner Gey van Pittius. "So rising food prices won't mean a train smash -- although the very poorest will be hurt." The IMF still sees a risk to Africa from the global credit crunch if investors become more risk averse and so flee the continent, warning of a 20 percent risk of 2008 growth falling to 5 percent as a result. But private investor enthusiasm remains even as it remains unclear if the sovereign wealth funds of mainly Asian and Middle Eastern commodity and oil producers accept the World Bank's exhortation to use money for African infrastructure development. FUNDS SHOW INTEREST New fund Duet Victoire says if it had existed from the beginning of 2007 it would have grown by 65 percent, saying IMF-backed reforms in the 1990s and debt relief more recently have enabled African countries to become more efficient. Investment bank Credit Suisse presents says a group of companies mainly based in South Africa or Europe are poised to take advantage of African growth and include Alstom, French oil firm Total, South African brewer SABMiller, fuel firm Sasol and mobile operator MTN. Africa is often seen as a single, poverty-ridden entity, but investors have grown more discriminating. "You have larger countries that are better able to handle (higher food prices) such as Nigeria, Zambia and Ghana then that much smaller countries that will have trouble," said Richard Segal, Africa strategist for Renaissance Capital. Some producer countries too may even benefit from higher food prices and the worst shortages are expected in areas little known to investors such as Somalia, Niger and Ethiopia. Standard Bank fund manager and ex-World Bank economist Alia Yousuf argues that foreign investment flows could in fact benefit ordinary people in these countries better than aid. "Financing smaller to medium-sized companies can create better opportunities by providing employment and making the population less dependent on aid," she said. Even if the food price crisis sees stories and pictures of African disaster and famine dominate the media, most investors say they will stick it out. "We have $1 billion on the continent and I don't think we would pull out just because the system isn't looking after the poorest people as well as it should," said Investec's van Pittius.