Manager focus: Jens Schleuniger
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Construction, consumption, commodities and China are “the four Cs” driving the African equity story, says Jens Schleuniger, the manager of the DWS Invest Africa fund.
Schleuniger says infrastructure spending is increasing which should have a positive long-term impact on the efficiency of African companies.
Domestic consumption also remains strong in Africa, he says, with a double-digit annual growth rate in most countries.
“Commodities remain a hot topic, especially after recent giant oil findings at the coast of Ghana,” Schleuniger says. He adds that some of the most promising commodity projects are situated on the continent.
This is one more reason why China has become increasingly active in acquiring African assets. Sinopec, the China Petroleum and Chemical Corporation, for example, has conducted its biggest overseas transaction by acquiring Addax, an exploration and production company with assets predominantly in Africa. “Accordingly, we expect current merger and acquisition activity to continue,” he says.
“The €31.6m (£28.81m) fund is invested in six African equity markets: Egypt, Ghana, Mali, South Africa, Uganda, and Zambia”
The €31.6m (£28.81m) fund is invested in six African equity markets: Egypt, Ghana, Mali, South Africa, Uganda, and Zambia. It tends to have a mid- to large-cap bias.
Schleuniger says the fund predominantly invests in fundamentally attractive companies, and value companies with strong growth characteristics that have good corporate governance and foreseeable catalysts. The portfolio consists of between 40 and 60 holdings in order to diversify country and sector risk.
The fund is most heavily invested in energy, materials, telecoms, and financials, followed by industrials, consumer discretionary and consumer staples. Because of improved visibility and a relatively sound financial environment in the African markets, the manager has recently significantly increased the exposure to African financials.
However, the team has become slightly more cautious on materials as they regards the current levels of some metals as unsustainable.
Schleuniger expects the football World Cup 2010, which will be hosted by South Africa, will help to present the whole African continent in a positive light. “This will hopefully lead to a change of investor perception about Africa,” he says. “After all, investing in Africa means investing in one of the world’s most dynamic economies.”
