Real Estate news - Africa still has investor appeal

Johannesburg - Foreign investors in South African equities and bonds may be heading for the exits, but the outside world is far from turning its back on Africa as a whole, according to investment manager Stanlib.

The contrast in sentiment was highlighted by Dylan Evans, Stanlib's UK-based director of global investment marketing.

Evans noted that recently anyone who "follows the money" will have witnessed a growing flight from South Africa, yet foreign direct investment (FDI) in the rest of Africa remains remarkably robust.

"During the first 22 days of October, foreigners sold a net R22.6 billion of South African equities, the largest monthly sell-off by foreigners ever recorded," said Evans.

"In the year to late October, foreigners sold a net R43.7 billion of South African equities a sharp contrast with previous years."

In 2007, foreigners bought a net R64.16 billion of South African equities and a net R220 billion from 2004 to 2007.

Evans said: "The dramatic acceleration of foreign equity sales and some bond sales has clearly weakened the rand. From the beginning of the year until late October, the rand weakened by 31.7 percent on a trade-weighted basis and by 41.1 percent against the dollar. This makes the rand the worst-performing emerging market currency this year."

Over the same period, the South African equity market lost around 30 percent of its value in rand terms and 58 percent in dollar terms. Yet foreigners remain largely supportive of many other countries in Africa, judging by recent FDI flows.

Evans points to $328 in FDI into Africa in the year to the end of September 2008. The biggest regional winners were West and North Africa. Nigeria alone attracted FDI of $88.85 billion, while investors showed great interest in Tunisia ($55.72 billion) and Egypt ($32.85 billion).

In the southern part of the continent, Angola attracted FDI of $11.45 billion while Namibia garnered $7.9 billion, making it the biggest FDI winner in per capita terms. FDI into Zambia totalled $4.63 billion; even troubled Zimbabwe enjoyed an inflow of $2.29 billion.

The sectors with greatest appeal for foreign investors were real estate (accounting for $83.45 billion), oil and gas ($81.62 billion), mining ($78.71 billion), infrastructure ($20.52 billion) and electricity ($20.26 billion).

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