Investors have pretty well forgotten about emerging markets over the past three years. The "BRIC" countries of Brazil, Russia, India and China no longer excite. Nor do more exotic non-BRIC locales such as South Africa. The iShares MSCI South Africa ETF (EZA) is down by roughly 15% since the beginning of 2011, while the S&P 500 has gained nearly 45%.
I've made no secret of the fact that I'm a major Africa bull. It's the last major investment frontier, and the growth is very real. Per capita GDP has more than doubled in the past decade, and according to Deloitte, seven of the 10 fastest-growing countries in the world are in Africa. One sign of the booming middle class is Africa's surprisingly high cell phone penetration; by Ericsson's estimates, the continent already has 780 million mobile subscribers. Don't underestimate the significance of this. Africa has harsh geography, which makes building infrastructure very difficult and very expensive. But mobile technology allows large parts of Africa to essentially leapfrog over legacy technology infrastructure - such as copper phone wires - and into the modern world.
This is showing up in some interesting places. For example, mobile phones are giving millions of working and middle-class consumers access to basic banking services for the first time. According to Deloitte, "a 10% increase in mobile phone penetration in a poor country is linked to an increase in GDP of 1.2% due to the ensuing economic activity that people engage in as a result of being 'plugged in' and connected." For a part of the world that has been more or less in isolation since the dawn of time, this is a game-changer.
source: www.seekingalpha.com
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