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Conference nyoss1::market_investing

Title:Market Investing
Moderator:2155::michaud
Created:Thu Jan 23 1992
Last Modified:Thu Jun 05 1997
Last Successful Update:Fri Jun 06 1997
Number of topics:1060
Total number of notes:10477

693.0. "Buy South Africa Funds Now?" by ASDG::MISTRY () Tue Mar 08 1994 01:15

    
    
    Some predictions:
    
    1) The first democratic elections in South Africa will be succesfull
    and the ANC will form the next government, despite continuing violence.
    
    2) The ANC's economic policies will not be as market unfriendly as many
    expect.  In particular, capital markets will be favored.
    
    If the above are true, the JSE (Johhanesburg Stock Exchange) should see 
    substantial appreciation over the coming months.  How best to play
    this?  Which open-ended mutual funds invest solely or primarily in
    S.A. equities?  Which closed end funds? 
    
    
    Kaizad
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693.1The precedents are badTLE::JBISHOPTue Mar 08 1994 13:2029
    I'll offer a prediction on the other side:  the ANC will win, but
    there will be substantial unrest (mostly black-vs-black).  The level
    of violence will continue to stay high, and outside investors
    will prefer to invest elsewhere.  Having won, the ANC will find 
    itself trapped: the population expects a significant improvement
    in their lives, but there isn't enough money.
    
    Young, educated whites will leave.  Taxes will go up.  South Africa
    will start a long slide downward, with democratic government,
    convertibility of money and exportability of capital some of the
    early casulties of the slide.
    
    I say this based on the examples of Rhodesia/Zimbwabwe, Mozambique,
    Angola, Kenya and Uganda: all recently controlled by a minority with
    European roots, all now having slid.
    
    Having said that, there are ways to play the long side of South
    Africa: ASA is a closed-end fund specializing in gold, there are
    lots of gold funds with varying percents of South African stocks,
    and I've read of stocks in other mining sectors (platinum).  I'd
    guess that low-end consumer goods companies might do well (beer,
    snack food, radios, t-shirts, cigarettes--the stuff poor people 
    around the world buy when they have spare cash), but I don't know
    of any companies to suggest.  On the other hand, outside companies
    of that sort will be doing some inward investment, so you might
    look at companies like Coca-Cola and Avon as having a slight 
    South African component.
    
    		-John Bishop
693.2another fundASDG::MISTRYTue Mar 08 1994 21:468
    
    Another closed end fund is the Southern Africa fund that invests
    largely in S.A. but also in other Southern African countries.
    
    Kaizad
    
    
    
693.3ZENDIA::FERGUSONRed XWed Mar 09 1994 12:453
Take a look at Monday's WSJ.  They have a list of tons of closed-end funds
in the C section.  has the NAV, street price, percent discount/premium, and
52-wk return.
693.4It's hard to invest in a pariahTLE::JBISHOPWed Mar 09 1994 13:0612
    SA is a hard pick, as many funds deliberately don't buy into
    that country (remember the big "divestment" push about five
    years ago?).  Other than gold funds, it may be hard to find
    any way to do what the author of .0 wants to do.
    
    Last night I happened to be reading the semi-annual report
    from Montgomery, and scanned the listing of investments of
    their three international funds.  Not one South African
    investment did I find, despite the size of that economy.
    They had Peru and Bolivia, but not South Africa!
    
    		-John Bishop
693.5ASDG::MISTRYTue Apr 19 1994 19:309
    
    
    I bought a sizable chunk of Southern Africa Fund today at $11.25.
    
    I'll enter another note when I sell, and we'll see which of the above
    noters had it right. . .  :-).
    
    
    Kaizad
693.6One year on...SUBPAC::MISTRYThu Apr 20 1995 20:5213
    
    
    One year on...
    
    SOA is trading at 14 5/8, for a 30% gain.  It also paid a 12%
    dividend based on the $11.25 purchase price in 693.5.  Total
    gain = 42%.
    
    I'm holding since the closed end fund is still trading at a 16%
    discount to NAV.
    
    
    Kaizad