Pathways via AIM and TTSE
After positive performance during the last month, stocks in South Africa are expected to continue climbing over the coming months as company inventories fall while consumer spending rises. In many ways, that’s a mirror image of what’s going on across Africa and in Caribbean nations that are fast attracting investment from as far as Brazil, South America’s economic powerhouse.
In South Africa, the Johannesburg Stock Exchange rallied 2 percent during April. Historically, from 1995 until 2013, South Africa stock index averaged 39.4 percent, reaching an all-time high in March of 2013. That uptrend should continue as more Africa-based companies list, not only on FTSE/JSE, but also on London-based Alternative Investment Market or AIM. In fact, smaller Africa-based firms listing on AIM provide new opportunities for investors looking to enter Africa, but who are uncertain about the market.
AIM is one of the most successful growth markets in the world. Since its launch in 1995, more than 3,000 companies from across the globe have chosen to join. Powering the companies of tomorrow, AIM continues to help smaller and growing companies raise the capital they need for expansion. Among these companies are Gasol of Guinea, SacOil Holdings of South Africa, Chariot Oil & Gas of Namibia and Bowleven of Cameroon. Their stocks have benefited from record-high corporate profits, so investors should be more willing to take on risk.
Meanwhile, the main buzz in Trinidad and Tobago capital markets has been the introduction of the Bourse Brazil Latin Fund, which will trade like any stock on the Trinidad and Tobago Stock Exchange, except that it will trade in U.S. dollars. The fund will provide a variety of opportunities for investors to enter the booming Brazilian market without going to Rio de Janeiro. Investors have priced in many of the risks of trading an index fund, including currency gyrations, access to the liquid Brazilian market and a well-regulated Brazilian market. They shouldn’t have to worry too much if history is any guide. The Latin American region and Brazil in particular generated a 21 percent average annual return during the 2008 – 2011 period, which is higher than 7.0 percent for TTSE’s Composite Index.
True, the Brazilian market has had a correction in recent times, but it now presents a prime opportunity for entry into a fundamentally strong BRIC economy via Port of Spain’s TTSE.