Africa On A Roll In An Uncertain World
During my childhood in Mombasa, my window onto the world were the back pages of the Economist. There,The Economist would publish all kinds of data sets and data Points. And in between, tugging my mother's apron, eating her chocolate. cake my umbilical cord to the world were those back pages of the Economist.
Later I would bet against those numbers, in my mind. Years later, I read Edwin Lefevre's book Reminiscences of a Stock Market Operator, in which he says 'The Tape is Your Telescope.' Bharat Thakrar said that you need to follow your passion at Mindspeak which is so true. Of course, when I first arrived on the trading floor and I realised I could back my judgement with real money, I was the happiest man in the World because all I had ever wanted to do was keep score and I had been studying the pitch for eternity. Then I was a lot less circumspect than I am today.
So let me read you a few points from the tape. The German two-year climbed seven basis points to minus 0.02 per cent on Friday. Yields below zero mean investors who hold the debt to maturity will receive less than they paid to buy them. The two-year rate reached minus 0.097 on Friday, matching the least since Bloomberg began collecting the data in 1990. Investors in the German two-year are evidently not looking for a return but only that they should get their money. In a World, where it is oftentimes difficult to pick up the signal because of the noise, The negative yield of the German two -year is a signal that is ringing as loud as the Church bells ring on a Sunday morning in a Cathedral City.
By contrast, The Caracas Stock Exchange has produced a +111.11% return in 2012 so far. here in Nairobi Uchumi has returned 100% over the same dates. Soybeans rose 35 per cent to $16.3125 a bushel on the Chicago Board of Trade this year and set a record $16.915 on July 23. Corn gained 25 per cent to $8.095 a bushel, reaching an all-time high of $8.205 on July 31. In point of fact, in between Corn and Caracas, there are a cluster of companies which have produced outstanding returns and many of them are in Nairobi. Kenya Commercial Bank +54.896%, Safaricom + 33.898%, KenolKobil +64.623%, BAT +72% to select just but a few.
I watch hundreds of prices continuously and am essentially looking for the elusive Alpha [My father once owned an Alfa Romeo which was a glorious automobile but impossibly expensive to maintain in Mombasa]. Alpha is in essence measuring the outperformance. If everyone starts with the same amount, the person who produces the highest alpha will be the richest, over time. This year, Nairobi has produced a very high alpha in the universe of world returns.
In fact, If you care to scan African benchmark indices, The tape is sending us a very interesting message. Egypt [admittedly from a deeply oversold and bombed out staring point] is +37.41%, Nairobi's NSE20 +19.906% [12 month high], Nigeria +13.473% [12 month high], South Africa All Share +10.189% [All time closing high].
In a world of uncertainty, where investors are just happy to get their capital back intact, Africa is on a roll. Hillary Clinton said this;“We believe if you want to make a good investment in the midst of what is still a very difficult global economy go to Africa.'' The tape confirms her Statement.