{"id":229381,"date":"2018-03-11T07:00:07","date_gmt":"2018-03-11T05:00:07","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=229381"},"modified":"2018-03-09T15:49:30","modified_gmt":"2018-03-09T13:49:30","slug":"why-you-should-invest-in-the-countries-trump-warned-against","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/business\/229381\/why-you-should-invest-in-the-countries-trump-warned-against\/","title":{"rendered":"Why you should invest in the countries Trump warned against"},"content":{"rendered":"<p>US president Donald Trump caused major upset in Africa recently when he reportedly referred to the continent as being made up of &#8220;sh*thole&#8221; countries. While the term has gained notoriety in a short space of time, fund managers at Ashburton Investments say it would be silly to discount Africa as an amazing investment opportunity.<\/p>\n<p>According to Paul Clark, a fund manager and Africa specialist at Ashburton Investments, news, like Trump&#8217;s comments, often focus on the worst issues facing the African continent. But on the ground, growth is continuing, infrastructure is improving, and business conditions are getting better.<\/p>\n<p>&#8220;As investors who travel across the continent regularly we observe these trends first hand, but these are also clear from surveys and economic measures,&#8221; Clark said.<\/p>\n<p>The recent budget tabled by the ministry of finance has also opened up opportunities for South African investors to get a slice of Africa&#8217;s growth story.<\/p>\n<p>Specifically, the prudential limits that allow pension funds to invest a portion of their members\u2019 funds outside of South Africa were raised. The limit for African investing was raised from 5% of the pension fund\u2019s assets to 10%. These allowances are in addition to the normal offshore limit that was raised to 30%.<\/p>\n<p class=\"p1\">Clark said that he believes that South Africans should allocate some of their retirement funding to African equities, for a few reasons:<\/p>\n<ul>\n<li class=\"p2\">One would be investing in a region that is growing quickly and where the economies are transforming their infrastructure, middle class consumers are growing and they are industrialising too;<\/li>\n<li class=\"p2\">One could get returns from a region that, because of its transformation, is not as connected to global events and markets as most other investment destinations, which allows you to diversify your returns;<\/li>\n<li class=\"p2\">The improving investor sentiment that is emerging for the continent will mean increased focus on these markets and share prices should recover from oversold positions providing additional returns over and above the strong growth outlook;<\/li>\n<li class=\"p2\">One could take advantage of the current strong Rand to US dollar exchange rate to invest in offshore assets.<\/li>\n<\/ul>\n<p>Ashburton pointed to data showing why Africa is a good bet, including growth rates, inflation rates and index performances.<\/p>\n<p>The key data comes from the International Monetary Fund, which shows Africa&#8217;s expected growth compared to other regions.<\/p>\n<p>The data shows that the continent, especially in countries that have equity markets and are typically more developed, are expected to grow faster than the world over the next five years and significantly faster than Advanced Economies or even South Africa over the period.<\/p>\n<p style=\"text-align: center;\"><strong>Real GDP growth rate forecasts<\/strong><\/p>\n<p><a  data-lightbox=\"post-image\" href=\"https:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2018\/03\/Growth-rates.png\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-full wp-image-229419\" src=\"https:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2018\/03\/Growth-rates.png\" alt=\"\" width=\"627\" height=\"368\" srcset=\"https:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2018\/03\/Growth-rates.png 627w, https:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2018\/03\/Growth-rates-300x176.png 300w\" sizes=\"auto, (max-width: 627px) 100vw, 627px\" \/><\/a><\/p>\n<p>&#8220;Of course there are also quite a few countries in Africa ex SA that are not performing as well and, even though they tend to make the news more often, are usually smaller economies that are less developed than those that have equity markets. An African (excluding South Africa) equity fund would typically not be invested in these countries,&#8221; Clark said.<\/p>\n<p>Outside of projected growth, Ashburton pointed to the inflation outlook for African countries with equity markets. While global inflation is rising, many African economies are just coming out of an inflationary spike:<\/p>\n<p><a  data-lightbox=\"post-image\" href=\"https:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2018\/03\/Inflation-rates.png\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-full wp-image-229417\" src=\"https:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2018\/03\/Inflation-rates.png\" alt=\"\" width=\"764\" height=\"559\" srcset=\"https:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2018\/03\/Inflation-rates.png 764w, https:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2018\/03\/Inflation-rates-300x220.png 300w\" sizes=\"auto, (max-width: 764px) 100vw, 764px\" \/><\/a><\/p>\n<p>&#8220;As inflation declines through 2018 we expect local interest rates to decline. This reduction in interest rates is expected to create further demand for equities,&#8221; the fund manager said.<\/p>\n<p>With many economies across the continent on a recovery path and inflation declining, we expect interest rates to start coming down soon. This will be positive for equity markets that will also start anticipating the generally improved economic outlook for the continent in 2018 and beyond. The strong Rand also provides a good entry point into this US dollar denominated asset class.<\/p>\n<p>&#8220;We believe that South African (and other) investors should diversify their returns by investing in the rest of Africa &#8211; even if some people call them sh**hole countries,&#8221; the group said.<\/p>\n<hr \/>\n<p><strong>Read:\u00a0<a href=\"https:\/\/businesstech.co.za\/news\/finance\/226927\/2018-budget-speech-in-a-nutshell\/\" rel=\"bookmark\">2018 budget speech in a nutshell<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Ashburton Investments belives that South African (and other) investors should be diversifying and investing in the rest of Africa &#8211; even if some people call them sh**hole countries.<\/p>\n","protected":false},"author":10,"featured_media":23316,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9872],"tags":[11483,26],"class_list":["post-229381","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business","tag-ashburton-investments","tag-headline"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/229381","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/10"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=229381"}],"version-history":[{"count":4,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/229381\/revisions"}],"predecessor-version":[{"id":230657,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/229381\/revisions\/230657"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/23316"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=229381"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=229381"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=229381"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}