Global Value Hunter

How you can invest in Africa without
opening an African brokerage account

A black woman using Tecno phone

As I’ve written about before, I’m very bullish on Africa’s long-term future growth prospects and I have personally invested in several companies listed on African stock exchanges.

But, for various reasons, many people are simply not comfortable opening a brokerage account outside their home country. If you’re in that camp, I’m sure you have your reasons.

But that doesn’t mean you can’t get some investment exposure to the growth of Africa. Many companies that derive the bulk of their sales and profits from Africa can be accessed via non-African stock exchanges.

The London Stock Exchange, for example, boasts over 120 listed companies from Africa and the Middle East with a combined market capitalization of over US$70 billion. This is the largest concentration of listed African businesses in one place anywhere in the world, besides Johannesburg.

My friend, Swen Lorenz, at recently wrote a 3-part series on investing in Africa, and also published an in-depth report (for his paying subscribers) on one London-listed company that is heavily exposed to the build-out of internet connectivity all over Africa.
The guys at Capitalist Exploits also recently had a brief feature in one of their Weekly Insider issues on a London-listed company that operates in Zambia.

In the USA, Jumia Technologies AG (JMIA on NASDAQ) went public to great fanfare last year. The company is modelling itself after Amazon and aiming to be the eCommerce retailing platform of choice for Africa.

However, they appear to have gone public too early, bitten off more than they can chew, and they are having difficulties executing on their business plan. The shares have sunk like a stone. This is a perfect example of why you cannot just blindly leap into any stock with an African investment angle. You need to do your homework. Even at these prices I wouldn’t go near Jumia. There are too many question marks.

There are also companies listed in China, that don’t even sell any products in China, but are completely focussed on Africa and the developing world. At this week’s Top 100 Brands in Africa unveiling, for example, the company with the most brands of all in the Top 100 is Shenzhen Stock Exchange listed Transsion.

Its Tecno brand of mobile phones is the 5th most popular brand of all in Africa according to the survey, behind giant global brands Nike, Adidas, Samsung, and Coca Cola.  Transsion’s other two mobile phone brands, Itel and Infinex also appear in the Top 100. I’m going to be doing a thorough analysis of Transsion. While it’s not a stock that appears cheap, it may still be worth investing in.

If you’re interested in doing further research yourself, you might want to check out the full list of Top 100 Brands in Africa for some investment ideas. While many of these brands belong to foreign companies, for some of these companies, such as Transsion, their African business comprises the lion’s share of their revenue and profits.

And the beauty is, their shares are often listed in the UK, Europe or the USA, and thus much more readily accessible to you if you have a brokerage account that can purchase shares on these developed market stock exchanges.

I’ll be writing more soon about another such company which I’m looking at possibly investing in. It operates in more than a dozen African markets, but is listed in London. So, stay tuned for that.

Until next time…

Good Investing!

Tim Staermose

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