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Re: African Security Markets

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  • pgreenfinch@wanadoo.fr
    Hello ! Yes, I think there is some bias here. It might be interesting to compare the return of South African goldmines in a long period, picking those with
    Message 1 of 7 , Sep 4, 2001
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      Hello !
      Yes, I think there is some bias here. It might be interesting to
      compare the return of South African goldmines in a long period,
      picking those with high dividend yields, with some North American
      one. Of course, as those SA mines are quite deep underground and
      partly depleted, they have higher mining costs. That makes their
      results thinner (and for some, negative) and more sensitive to gold
      prices, which fell nearly continuously in the last two decades. Maybe
      somebody has data. Any gold bug here ?
      (btw, gold stocks fare better than the Dow, those days)
      PG

      --- In Behavioral-Finance@y..., leif_ericssen@y... wrote:
      > This reminds me of the reaction about a year ago in a thread when I
      > mentioned investing in Econet Wireless, the ISP and cell phone firm
      > in Zimbabwe.
      >
      > I'm not sure if it's too relevant here as an anecdote, but the
      > responses seemed (to me) something like "you're putting your money
      > There??"
      >
      > I tend to believe that most Westerners have very negative
      perceptions
      > about Africa (my own are not so positive, really) and have the
      image
      > of gangsters running post-colonial crashed countries where the
      people
      > are starving and dying of AIDS. This is almost the only image the
      > American media presents.
      >
      > I think this skewed perception more than anything else keeps most
      US
      > private and professional investors and corporate managers from ever
      > considering Africa. For many of them, it may be that no price will
      be
      > low enough because they don't recognise the potential and overweigh
      > severe risks.
      >
      > Jan
    • leif_ericssen@yahoo.com
      I think a few people have notised relative gold shares yields in N.Am and SA since the 1970s. I suppose one could buy the SA trusts when there was news of
      Message 2 of 7 , Sep 4, 2001
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        I think a few people have notised relative gold shares yields in N.Am
        and SA since the 1970s. I suppose one could buy the SA trusts when
        there was news of riots and necklaces. But I don't know of any formal
        studies indicating whether the differentials reasonably reflected the
        tax situations and political risks.

        Regarding the depletion situation, I read once that the gold miners
        in SA had the practise of mining the purer veins when the price of
        gold was low and switching to the other grades of ore when the price
        rose. I don't know if that still is being done and yes the shafts are
        very deep now, but then again would they show their cards about their
        true capacity and reserves? :)

        Jan

        --- In Behavioral-Finance@y..., pgreenfinch@w... wrote:
        > Hello !
        > Yes, I think there is some bias here. It might be interesting to
        > compare the return of South African goldmines in a long period,
        > picking those with high dividend yields, with some North American
        > one. Of course, as those SA mines are quite deep underground and
        > partly depleted, they have higher mining costs. That makes their
        > results thinner (and for some, negative) and more sensitive to gold
        > prices, which fell nearly continuously in the last two decades.
        Maybe
        > somebody has data. Any gold bug here ?
        > (btw, gold stocks fare better than the Dow, those days)
        > PG
        >
        > --- In Behavioral-Finance@y..., leif_ericssen@y... wrote:
        > > This reminds me of the reaction about a year ago in a thread when
        I
        > > mentioned investing in Econet Wireless, the ISP and cell phone
        firm
        > > in Zimbabwe.
        > >
        > > I'm not sure if it's too relevant here as an anecdote, but the
        > > responses seemed (to me) something like "you're putting your
        money
        > > There??"
        > >
        > > I tend to believe that most Westerners have very negative
        > perceptions
        > > about Africa (my own are not so positive, really) and have the
        > image
        > > of gangsters running post-colonial crashed countries where the
        > people
        > > are starving and dying of AIDS. This is almost the only image the
        > > American media presents.
        > >
        > > I think this skewed perception more than anything else keeps most
        > US
        > > private and professional investors and corporate managers from
        ever
        > > considering Africa. For many of them, it may be that no price
        will
        > be
        > > low enough because they don't recognise the potential and
        overweigh
        > > severe risks.
        > >
        > > Jan
      • leif_ericssen@yahoo.com
        I ve been thinking a little about the case for African stocks and the possibility that they are truly neglected by foreign investors. I know there are a couple
        Message 3 of 7 , Sep 6, 2001
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          I've been thinking a little about the case for African stocks and the
          possibility that they are truly neglected by foreign investors.

          I know there are a couple of closed-end funds in the US that invest
          in Arfica, and I think they are concentrated in JSE listed stocks.

          Maybe this is because other African markets don't have the depth for
          institutional investors, I don't know.

          Perhaps it's a question of high transaction costs or forex or an
          ethics risk. (Again, I don't know.)

          Restrictions on foreign investment may be an issue, but somehow I
          doubt it, since it seems that African stocks are under-owned by
          foreigners.

          Information risk may apply here; I'll have to see in trying to
          research African stocks. :)

          I'm assuming from my very casual awareness of SA and Zimbabwe that
          African stocks come in a set of basic industries/sectors like
          agriculture, banking, construction, manufacturing, mining, and
          transportation. Oh, and some trading firms and holding Cos listed
          too. Perhaps some hotel/tourism?

          That's a rather narrow range of industries to invest in, and they are
          cyclical, I notise. Corporate Africa isn't sexy maybe. But it's
          possible that there are some solid dull-but-makes-money firms there
          that are undervalued.

          Assuming that transaction costs enable this, maybe it's possible to
          play convergence/hedging games with the commodity firms and the
          futures markets?

          This thread isn't really BF, but I think this is fun to discuss and
          explore African stocks. They don't come up in the news and a focus on
          an area that has so little 1st world mind share seems relevant to BF,
          no? :)

          Jan
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