Franklin Templeton is bullish on Africa
Over a recent interview with Citywire Selector, Carlos Hardenberg, director of frontier markets at Templeton Emerging Markets Group, said that Franklin Templeton is bullish on Africa (EZA) (GAF). “We’re seeing a lot of opportunities in the African continent in particular. A lot of countries are just opening up, and lots of companies which are available are still government controlled.”
African frontier markets (FRN) (FM) are now beginning the process of listing companies on local stock exchanges, thereby, allowing private ownership in these companies. Capital market activity in Ghana, Morocco, and Botswana, particularly, was driven by partial privatizations of state-owned entities.
Africa has raised $6.5 billion from 110 IPOs
Over the past five years, Africa’s stock markets raised $6.5 billion from about 110 IPOs (initial public offerings). A total of $1.5 billion was raised in 2016 alone driven by a stronger rand. The financial services sector continued to dominate the African IPO market in 2016 (amounting to 45% of total value raised), followed by the consumer goods (31%) and industrials (13%) sector.
The Johannesburg Stock Exchange’s major listings in 2016 included Dis-Chem, Liberty Two Degrees real estate investment trust (REIT), and Ethos.
Stock market performance
The iShares MSCI South Africa (EZA) has returned 23.56% over the past one year (as of May 27); an 18.4% return so far in 2017. The fund is heavily weighted towards financials (29.7%) and the technology (26.9%) sector. Naspers (NPSNY) (NAPRF), Africa’s most valuable company commands over a fourth of the EZA portfolio alone.