Insync Funds Management is predicting that Africa will be the next big growth region for stock pickers.
The fund manager’s Chief Investment Officer, Monik Kotecha, said that investors will soon be talking about Africa as they used to talk about Asia and Latin America. Already, companies like Coca-Cola and Danone anticipate further penetration of their brands as per capita income continues to rise.
For example, African sales for Danone continue to accelerate beyond the 2014 results which were six times the 2008 figures. In Africa, Danone generates more than one billion euros in sales.
“A lot of incremental growth is coming from that region,” Mr Kotecha said.
While population increase contributes to that growth, it is the movement of people from rural to urban areas, accompanied by higher per capita income, which is driving the rising emerging consumer markets that make Africa so attractive for large global brands.
“The expanding consumer market is a juggernaut of a trend that will last for many decades,” Mr Kotecha predicted.
From any big-picture perspective, population dynamics will have an influence on global demography in the 21st century. Of the 2.37 billion increase in population expected worldwide by 2050, Africa alone will contribute 54%. By 2100, Africa will contribute 82% of total growth: 3.2 billion of the overall increase of 3.8 billion people. Experts predict that by 2050, Nigeria’s population will exceed that of the United States and be the third largest populated country by the end of this century.
“In beer, for example, Africa will be the fastest growing geographic region with a lot of the growth being generated at high levels of profitability,” Mr Kotecha claimed.
Source: Deutsche Bank
Insync, which invests in the top 150 most consistently profitable global companies, has invested in companies that are likely to benefit from African growth.
“We have some exposure there, and we continue to look for exposure there, because we think that is a very, very powerful trend,” Mr Kotecha said.
Media enquiries:
Mr Monik Kotecha
CIO
Insync Funds Management
t: (02) 9216 2977
m: 0413 768 480
mkotecha@insyncfm.com.au
www.insyncfm.com.au