Friday, January 1, 2010
Thursday, October 16, 2008
Mind Over Matter
African Securities markets, and listed securities, are the beneficiaries of the weak linkage between them and the tumultuous securities markets of advanced economies such as US and Europe. While African securities and securities markets are not totally delinked from the rest of the world (and have experienced sharp corrections this year), they are sheltered (relatively speaking) from the full impact of the global financial tsunami because of their "incredible lightness of being" by global securities market standards. For once, this traditional disadvantage is playing to Africa's (temporary) advantage. African banks are in better shape than their US and European competitors, African governments are likewise in relatively better fiscal shape. Prices of African securities have fallen, but they are still relatively higher than their US and European counterparts. It proves the adage that one's disadvantages are not destined to remain so permanently.
What does this mean for the investor in African securities and companies? Might it mean (regrettably) that African companies and securities are relatively overpriced -- with an implication that African securities prices may have to fall in future in order to restore relative valuation to their pre-crisis levels? What does it mean for investors who may have experienced huge gains from long-term positions in African securities -- what should they do? What about newcomers to African securities markets -- what should they do? What about those investors who have not entered that market but are inclined to do so now that African securities seem to be more reasonably priced -- should they jump in now or wait for further corrections? Enquiring minds want to know. What do you think? Mind over matter.
What does this mean for the investor in African securities and companies? Might it mean (regrettably) that African companies and securities are relatively overpriced -- with an implication that African securities prices may have to fall in future in order to restore relative valuation to their pre-crisis levels? What does it mean for investors who may have experienced huge gains from long-term positions in African securities -- what should they do? What about newcomers to African securities markets -- what should they do? What about those investors who have not entered that market but are inclined to do so now that African securities seem to be more reasonably priced -- should they jump in now or wait for further corrections? Enquiring minds want to know. What do you think? Mind over matter.
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