24/7 Wall St. » GAF

Mixed Gains in Africa and Middle East Shares & ETFs (EGPT, AFK, FFD, TUR, TKF, ISL, EIS, GAF, APA, PTNR, VIP)

Administrator — Mon, 31 Jan 2011 19:31:43 +0000

Oil was hitting highs earlier today despite a recovery in the markets that fell the most on Friday. The situation in Egypt is not exactly getting better, but it has not yet erupted into all-out anarchy and it has not yet gotten worse. What is amazing is just how much some of the local market and regional area ETFs have come back. Some have regained most of the losses from Friday, and we have hit a couple of closed-end funds and international stocks with exposure there in Egypt and the region as well.

The pure-play ETF is Market Vectors Egypt Index ETF (NYSE: EGPT). A week ago it was at $18.80 and it closed at $16.22 on Friday. After having much of the morning with shares halted, the ETF is up 5.6% at $17.14 on just over 600,000 shares right after 2:00 PM EST.

Market Vectors Africa Index ETF (NYSE: AFK) was down over 4% at $32.36 late on Friday and shares are up 0.4% at $32.44 today.

The Morgan Stanley Frontier Emerging Markets (NYSE: FFD) was down over 5% at $14.28 late on Friday and shares are up 1.8% at $14.42 today.

Turkey is even farther away than some peers, but the drop happened last week and the recovery is here today. The iShares MSCI Turkey Investable Market Index (NYSE: TUR) was down 6.9% at $58.07 late on Friday and shares are up 3.1% at $59.84 this afternoon. The Turkish Investment Fund Inc. (NYSE: TKF) was down 5.6% at $15.10 late Friday and shares are up 2.3% at $15.45 this afternoon.

North African and Middle East tension always causes concern in Israel… The Aberdeen Israel Fund Inc. (NYSE: ISL) was down 4.3% at $16.75 late Friday and shares are down another 1.5% at $16.50 today. The iShares MSCI Israel Cap Investable Market Index (NYSE: EIS) was down 3.1% at $57.84 late on Friday and shares are today trading down another 2.4% at $56.59.

The SPDR S&P Emerging Middle East & Africa (NYSE: GAF) was down almost 5% at $68.62 late on Friday and shares are up 0.9% at $69.21 on Monday afternoon.

Apache Corp. (NYSE: APA) had traded ad low as $110.20 on Friday and closed at $114.84 with its substantial exposure in Egypt. Shares have recovered yet another 2.8% today to $118.05.

Partner Communications Company Ltd. (NASDAQ: PTNR) offers cellular phone service under the Orange brand in Israel. Shares closed down over 2% Friday at $20.04 and shares are down another 4.7% at $19.09 this afternoon.

Vimpel-Communications (NYSE: VIP) is a Russian cellular provider but it is in the midst of acquiring Orascom’s telecom assets in Egypt and shares closed down almost 3% at $13.96 on Friday. Its shares are down another 0.5% today.

JON C. OGG

Filed under: ADR, ETF, International Markets, Mutual Funds, Oil & Gas Tagged: AFK, APA, EGPT, EIS, FFD, GAF, ISL, PTNR, TKF, TUR, VIP

Safaricom Soars in Kenya IPO (VOD, GAF, EZA, TRAMX)

247wallst — Mon, 09 Jun 2008 17:44:50 +0000

Today was a feature we have loosely been covering on occasion, and that is investing on the final frontier here on Earth: Africa. Interestingly enough, Vodafone Group plc (NYSE: VOD) is tied into this company with ownership.

Kenya’s IPO of a 25% stake in Safaricom saw high enough demand that it’s IPO was oversubscribed by the tune of almost 5-times. Its value was about $800 million depending on which currency conversion dates you use. This was offered at a price of 5 shillings (close to $0.08), and shares closed on the first day at 6.95 shilling on the local market after hitting a high of around 8 shillings. This closing price gives the closing value via market capitalization of about $4.5 Billion.

Safaricom is the nations largest mobile telecom operator with over 10 million users, which sells airtime for as little as pennies and allows micro-payments to purchase small increments in airtime.

This had unfortunately seen its IPO delayed, and more peaceful times allowed the demand to surge. Whether or not the coalition holds up or not, well all we can say it that it is Africa and political instability is all part of the risk and reward equation there. The success of this IPO may lead to several other IPO filings and other pricings in other infrastructure stakes in the East Africa nation.

Vodafone owns a 40% stake in the offering via its Kenyan unit called Vodafone Kenya Ltd. Before the IPO the government owned some 60% of the company, and its stake has now been reduced down to 35% after one-quarter of the company was sold off to the public.

Interestingly enough, there are reports that many locals and first time investors were disappointed and many had borrowed money to buy shares. The extent of that isn’t yet formalized and may not be known for several days.

So why are we covering an African IPO, particularly with all the political and event risk in most African nations? The answer is simple: this is the last true emerging and pre-emerging spot on the globe. It is a total and complete maze for investors to participate in the investment of Africa’s development because of the questions around corruption, cross-border issues, famine, disease, poverty, and on and on. That is also the greatest shot for long-term gains if and when the risks in Africa become mitigated even a fraction compared to today.

In the start of January 2008, we offered 3 ETF’s and mutual funds that American investors can use to invest in the development of Africa and gave a more detailed explanation of each. The funds were T. Rowe Price Africa & Middle East (TRAMX), iShares MSCI South Africa Index (NYSE: EZA), and SPDR S&P Emerging Middle East & Africa (AMEX: GAF). These are not for widows and orphans, nor are they for the chicken-hearted. As more and more opportunities arise for US investors to invest in Africa, we’ll be covering it.

You can join our open email distribution list to hear about other developments in IPO’s, secondary financings, spin-offs, mergers, and other special situations.

Jon C. Ogg
June 9, 2008

Africa: The Final Emerging Market Frontier (GAF, EZA, TRAMX)

247wallst — Thu, 03 Jan 2008 13:17:32 +0000

As investors look for emerging markets in 2008 and beyond, they may start to look for emerging markets that have yet to emerge from that deep emerging market status. The last spot on the planet that has yet to be turned into a series of countries with something resembling stable market economies and somewhat stable governments is AFRICA. Africa is perhaps the hardest place in the world to invest in, although there are a whole host of US-listed companies which generate much of their operations in Africa. The problem is that these often appear on investor boycott lists and are hard for an investor to get direct information on. Africa is a bad neighborhood when you consider strife around the entire continent. Even staunch humanitarians would say so.

The good news is that there are actually some ETF’s and funds that investors can purchase to invest directly into African markets and US or Foreign companies that operate in African markets. Below are some of the ETF’s and funds:

SPDR S&P Emerging Middle East & Africa (AMEX: GAF) yesterday closed $70.72; 52-week trading range $57.55 to $80.19. $50.5 million in assets.
iShares MSCI South Africa Index (NYSE: EZA) yesterday close $131.75; 52-week trading range $103.38 to $153.79. $839 million in assets.
T. Rowe Price Africa & Middle East (TRAMX) $13.05 yesterday NAV; recent low $10.01 Sept. 10, 2007 and high $13.05. $120.8 million assets.

So why don’t investors just buy direct stocks on exchanges of more established countries to get direct exposure? Once again, Africa is a very dangerous neighborhood. Crime and corruption is rampant in many African nations, political turmoil may be the understatement of the decade, they have things called civil wars there, many markets do not even have legitimate stock exchanges, many countries are mere regions recognized only by map-makers, and many companies only benefit from oil, gold and metals, or diamonds. Mark Mobius of Templeton Funds used to say "invest when there is blood in the streets." In Africa, blood in the streets seems to still be the norm.

Investors are always looking for the next new hot emerging market, or at better yet a hot new region to invest their money into for the long-haul to outperform developed nations. If you have been around Asia you know a lot of the growth has already happened. Eastern Europe already has countries in or in the process of joining the E.U. Russia has grown enough that Czar Putin was just named Time’s Man of the Year. The Middle East is boom town right now with development and with near-$100 oil. South America is chugging right along. Unless Greenland or Antarctica suddenly get waves of human population in need of infrastructure, Africa appears to be one of the last frontiers.

These are not at all the only ways to invest in Africa and there are other vehicles out there. But these are the more easy ways for American investors to try to participate in what through time should end up being the last major emerging market frontier.

Jon C. Ogg
January 3, 2008

ETF Winners & Losers (June 11, 2007)

247wallst — Mon, 11 Jun 2007 15:47:09 +0000

Stock Tickers: DBB, XES, GAF, RYU, DBA, EWZ, GML, URE, XME, XHB, TLO, ICF, EWL, EWY

DJIA             13,424.96; -0.57 (0.00%)
S&P500       1,509.12; -1.45 (0.10%)
NASDAQ       2,572.15; -1.39 (0.05%)
10-Yr Bond    5.137%; +0.019%
NYSE Volume       2,485,616,000
NASDAQ Volume 1,677,733,000

WINNERS

PowerShares DB Base Metals (DBB) 2.34%
SPDR S&P Oil & Gas Equipment & Services (XES) +2.5%
PowerShares DB Commodity Index Tracking Fund +1.80%
SPDR S&P Emerging Middle East & Africa (GAF) +1.76%
Rydex S&P Equal Weight Utilities (RYU) +1.73%
PowerShares DB Agriculture (DBA) +1.70%
iShares MSCI Brazil Index (EWZ) +1.68%
SPDR S&P Emerging Latin America (GML) +1.65%

LOSERS

Ultra Real Estate ProShares (URE) (-2.89%)
SPDR S&P Metals & Mining (XME) (-2.14%)
SPDR S&P Homebuilders (XHB) (-1.95%)
StateStreet Trust LEHMAN L-T Treasury (TLO) (-1.82%)
iShares Cohen & Steers Realty Majors (ICF) (-1.70%)
iShares MSCI Switzerland Index (EWL) (-1.06%)
iShares MSCI South Korea Index (EWY) (-0.95%)

Jon C. Ogg
June 11, 2007

Jon Ogg can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.