Nascent market lures cash
AS interest in South African equities and bonds grows, a securities company in Hong Kong is urging investors to take a closer look at the emerging market.
NedSecurities (Asia) Limited, a wholly-owned subsidiary of Nedcor Bank Limited, offers specialised services to companies or individuals interested in investments in South Africa.
The firm was spawned from parent company NedFinance (Asia) Limited in Hong Kong in October last year, and is the first licensed South African securities company in the region.
NedFinance offers private banking services.
The dual currency system in South Africa affords enhanced returns to non-resident investors.
''Bonds are currently yielding about 12 per cent to local South Africans and 16 per cent to foreigners,'' said Courtenay Regester, NedSecurities' dealing director.
Mr Regester said interest in South African equities and bonds had been growing among foreigners and that ''many individuals are now exposing a proportion of their portfolios to South African bonds and equities''.
''For the Hong Kong resident earning two per cent on deposit and facing an inflation rate of around eight per cent, a yield of 16 per cent on South African bonds certainly looks attractive,'' he said.
Home to some of the world's largest mining companies, South Africa is probably best known for its mining equities.
Many large mineral companies are listed on the Johannesburg Stock Exchange (JSE) and are popular among non-resident investors.
''What investors here are less aware of,'' said Lindy Roux, head of research at NedSecurities, ''is that there are a lot of great industrial companies with good tradability that will benefit directly from the turnaround in the South African economy and the post-election reconstruction process.'' She added: ''The South African economy is currently emerging from one of its longest and deepest recessions and, depending on the policy mix adopted by a new government, looks set to post impressive growth rates over the next few years.
''The process of political change in South Africa has been painful, but, with elections just around the corner, things are looking up.'' Mr Regester said research into the developments in South African bond and equity markets, as well as the firm's high standard of execution, allowed it to provide the level of service required by clients.
''While we are currently the only licensed South African institution providing exposure to the country and already have a sizeable client base, we are not resting on our laurels. We continuously strive to improve the quality of information and advice available to clients,'' he said.
''In addition to the investment services of NedSecurities, clients make use of the private banking facilities provided by NedFinance,'' said Mr Regester.