| ED CROPLEY |
Published: 2010/07/08 06:21:52 AM
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TO GREED and fear, you can now add soccer.
The buzz from Africa’s first soccer World Cup is being heard in investment houses across the globe, drawing new business and even capital to a continent that has evolved in the past decade from being an international basket case to a fast- growing frontier market.
“There’s definitely been a pick-up in flows from Europe. There’s no doubt about that,” said John Mackie, head of African investments at Stanlib, which manages $300m in sub- Saharan Africa.
His comments, supported by several other fund managers, are the first signs of SA accruing some of the “intangible” benefits needed to recoup the R40bn it spent on new stadiums and upgrading roads and railways for the soccer spectacular.
Analysts estimate the foreign fans who turned up — full arrivals numbers are not yet available — will only inject R13bn into the economy, while the government says the tournament should boost growth this year by 0,4 percentage points.
However, in the long run it believes SA will more than recover its costs through the rebranding of a country noted overseas mainly for violent crime, thereby attracting more tourists and investment.
The investment side already appears to be working as businessmen and money managers the world over have tuned in to watch a smoothly run tournament staged in packed and spectacular stadiums before enthusiastic and well-behaved fans.
It is a far cry from the popular external image of Africa as a hopeless and hapless continent more accustomed to making headlines through war, pestilence, famine and death.
“People are sitting in Denmark and France and the UK saying, ‘That stadium looks a hell of a lot better than anything we’ve got here, and it looks like it works and everybody’s still alive,’” Mr Mackie said.
“There’s no question it’s changing perceptions.”
Anecdotal evidence suggests the soccer has swayed investment decisions as it has reached a television audience of billions in every corner of the globe.
Asset Management reported heightened interest from Japanese investors in a recently launched 200m African commodities fund the day after Japan advanced to the knockout stages.
“After Japan won the football match we got another big subscription the next day,” global business development director John Green said.
Not everybody is quite so hasty, although serious investor interest — piqued in part by Lion on the Move, a weighty and overwhelmingly positive report on Africa released last month by consultancy McKinsey — has never been as intense.
“It hasn’t necessarily led to flows yet but the right questions are being asked,” said Simone Lowe of Thames River Capital, who oversees a 50m fund investing in SA and markets such as Nigeria and Kenya. “The interest is coming from all over — the US, UK and Europe. Obviously SA has been at the forefront, but the interest is definitely more widely spread.”
Market data back up the hearsay. Foreigners have been net buyers of South African equities in three of the four weeks since the World Cup started, according to the JSE.
Overall, during the tournament they have bought 398m of South African stocks, even though the bourse’s top 40 index has dipped 2,6% and underperformed other emerging equity markets by more than 4%.
The ripples have been felt further afield.
Four days after 19-million people in the US — the biggest soccer audience in US history — tuned in to watch their side lose to Ghana, the west African state’s landmark 2007 eurobond strengthened dramatically.
By contrast, a eurobond from fellow frontier African economy Gabon, which normally moves in lockstep with the Ghana issue, was unmoved.
The sort of television exposure enjoyed by Ghana, as well as reports filtering back from SA by word of mouth, suggest businessmen and potential tourists are looking at the entire region with new eyes.
“I’d been led to believe that everybody who went to the World Cup was going to be kidnapped or murdered, but it just hasn’t happened,” said Matthew Cooksley, a London-based management consultant.
“All my mates who went said they had the most fantastic time and the atmosphere was incredible.” Reuters