Important Updates for Investors
Carla Pasternak's Premiere Issue of High-Yield International Just
Released
Income expert Carla Pasternak's debut issue of High-Yield
International covers a Taiwanese manufacturer yielding 9.5%... a
rare Mexican monopoly yielding 13.4%... and other top-performing
investments yielding up to 19.0%.
Government's Biofuel Timetable Could Spell +15,900% Growth
+15,900% growth might seem far-fetched... but it's not. In fact, it
is mandated by law. And I've identified the ONLY stock positioned to
capture this growth.
The
Silver Lining to a Falling Dollar
Despite the U.S. national debt, there is a silver lining for income
investors. This massive spending, combined with movement out of U.S.
Treasuries, is going to take its toll on the dollar, and
international income investors could reap the rewards in the form of
higher dividends. |
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Own the Strongest Firms on the Next Great Investment Frontier |
Published:
August 25, 2008
Market Vectors
Africa (NYSE: AFK, $37.18) invests in the stocks of the Dow
Jones Africa Titans 50 Index. These are all stocks of companies
either based in Africa or that derive more than 50% of their
revenues from Africa. Stocks from Nigeria, South Africa, Egypt
and Morocco take the top weighting in the fund, making up close
to three quarters of the portfolio.
Catalysts: Some of the markets AFK invests in,
such as South Africa, are considered emerging markets rather
than frontier. Nonetheless, AFK offers the most concentrated
exposure of any fund to the frontier markets of Africa. And all
of the markets in the fund certainly share the frontier
characteristics of high economic growth and the potential for
large returns.
Africa remains one of the world's poorest regions. According to
Van Eck, the manager of AFK, the entire continent has 15% of the
world's population but only accounts for 2% of global GDP.
Nonetheless, the region is seeing major economic improvement. On
average, sub-Saharan African grew at a near +7% pace in 2007,
and growth has remained above +6% in each of the past three
years.
Just as with the Middle East, some of this improvement is due to
exposure to energy and mineral commodity markets. Africa is
among the world's top producers of gold, platinum, uranium and
diamonds. In addition, some countries such as Nigeria and Angola
are becoming important and fast-growing suppliers of crude oil.
And money from natural resource exports is stimulating other
sectors of the African economy, just as it is in the Middle
East.
There are other reasons for optimism, too. Corruption and social
instability have been a problem in many African nations and
remain a major issue for some countries in the region. However,
many nations are making progress in this area. Botswana is a
classic example.
This tiny nation of 1.8 million is a rich source of diamonds --
the government-owned diamond firm partners with foreign
companies in developing resources. Those resource monies have,
in turn, been spent on badly needed infrastructure and
development projects. In addition, the government in Botswana
has taken steps toward free-market reform, including lowering
barriers to trade and a responsible fiscal policy.
Finally, foreign investment into Africa is booming. Taking into
account direct investment by companies, investment funds and
loans, private monies flowing into Africa topped $50 billion
last year -- up from just over $10 billion in 2000.
Valuation and Outlook: AFK listed earlier this
summer and thus has a limited trading history. However, the Dow
Jones Africa Titans 50 Index offers exposure to the largest
companies in some of the most promising African markets. The
average P/E ratio of the stocks in the fund stands at just
under 15, but the average 2008 growth rate projected for AFK's
top five holdings is more than +20%; that valuation looks
justified by the growth prospects.
Moreover, just as with PMNA, AFK looks like a decent
diversification tool for U.S.-based investors. The fund's
correlation with the S&P 500 is under 0.25.
Action to Take -->
With the exception of South Africa, none of the countries where
AFK invests have stocks trading as ADRs in the U.S. Furthermore,
buying stocks off the African exchanges would require finding a
local broker as no U.S. brokers handle trades there. Thus, AFK
is one of the only ways for U.S.-based individual investors to
play the African growth story. The fund looks like a "Buy" under
$50.
-- Paul Tracy
Editor
StreetAuthority
Market Advisor
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