Understanding The American Investors’ Pysche … What Zambia Needs To Do To Attract Them

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The $64 billion question remains as to how Zambia can attract western investors … we at the Zambian Chronicle (in July this year) once detailed that as a nation, the country had serious competitors and we needed to get into these competitors’ pysche as well as those of the would-be investors’ to succeed.

In an article posted in the Washington Post, Tomoel Murakami Tse shades more light on what western investors are looking for before they can make our enterprise a destination for their investment dollars … thanks a trillion

For Further Reading Click Here … http://zambianchronicle.com/2007/07/26/116/

By Tomoeh Murakami Tse

Washington Post Staff Writer

Forget the emerging markets of China, Brazil, India and Russia. If you’re looking for that extra kick in your investment portfolio, you’ll have to venture to Latvia, Bangladesh, Namibia and Ivory Coast, according to a small but growing number of mutual fund managers exploring the front line of stock investing known as frontier markets.

In the past several years, many investors who put their money into emerging markets enjoyed annual returns of more than 30 percent, attracting capital from Japanese housewives and American pensioners.

Bangladesh’s market rose 60 percent in the past year. The head of the exchange says its value will double next year, lifted by IPOs for state and private firms. (By David Greedy — Bloomberg News)

But as investments in Chinese retail companies and Indian tech firms become more mainstream, and as more analysts caution that such outsize gains are not sustainable, money managers are asking: Where next?

“A lot of hidden gems are no longer hidden,” said Hugh Hunter, head of global emerging markets at WestLB Mellon Asset Management. “Clearly, frontier markets are the next tier. . . . We have no option but to go forward in this area.”

So don’t be surprised if you start seeing unfamiliar stocks from far-flung places on statements from your emerging markets fund manager.

Aside from the need to keep looking for new investment opportunities, Hunter and others say, economic growth and development of the capital markets have turned some frontier markets into appealing, long-term investments for those with a healthy appetite for risk. Money managers view the frontier economies much as they did the emerging markets of a decade ago. They are hopping on airplanes to visit countries where as few as a half-dozen companies are listed on the local stock exchanges.

A handful of mutual fund firms, including Franklin Templeton and Baltimore-based T. Rowe Price, already offer individual investors exposure to the frontier markets via emerging market mutual funds. This month, T. Rowe launched the Africa & Middle East Fund, with investments in Kenya and Lebanon, among other places. As markets develop, T. Rowe said, the fund could potentially invest in Algeria, Botswana, Ghana, Kuwait, Mauritius, Namibia, Tunisia and Zimbabwe.

 

“We’ve seen a number of factors come together,” said Joseph Rohm, an analyst for the fund. “Africa is enjoying strong GDP growth. Inflation has halved over the last five years. . . . We’ve seen governments spend heavily on power, electricity, roads. For the first time ever in the continent’s history, that’s really happening.”The fund’s largest holdings include United Bank, the largest lender in Nigeria, which recently implemented reforms in the banking sector. The bank is expanding operations outside the country, T. Rowe noted.

There is no precise definition of what constitutes a frontier market vs. an emerging market. Some investors, for example, consider Israel and Korea to be developed markets, while others do not.

In general, frontier markets are smaller — fewer companies, fewer investors, less trading. There’s also less regulation, information on companies and transparency. The markets are considered to be in the nascent stages of development and even riskier than emerging markets, which, of course, are riskier than developed markets like the United States.

Think of it this way: While a money manager invested in an emerging market might worry about bubbles created by unsophisticated domestic investors, his or her counterpart in a frontier market might be concerned about a lack of local investors.

About 540 stocks are traded across 22 frontier markets, with a total market capitalization of $165 billion, according to an April report by Acadian Asset Management. By comparison, the market cap of just one Russian oil company, Lukoil, is about $70 billion, and more than 800 companies are listed on the Shanghai Stock Exchange, one of two exchanges in China.

Despite its size, a frontier market can reward investors handsomely. In the past three years, the Ukrainian stock market has returned 700 percent. It has risen about 160 percent in the past year, while the market in Slovenia gained 110 percent. Botswana returned about 90 percent, and Bangladesh advanced 60 percent. But not all are winners. The Jamaican exchange is down 4 percent this year, though it gained 150 percent in 2003 and 2004 combined.

The S&P/IFC Global Frontier Markets index, which covers the stock markets of 22 countries, gained 49 percent in the year ended Aug. 31. That compares with 16 percent for the Standard & Poor’s 500-stock index during the same period.

But numerous potential downfalls exist in frontier markets. One big concern is the lack of “liquidity,” or the ability to buy and sell stocks quickly. Hunter of WestLB Mellon said it recently took him close to a month to get out of a single position in a frontier market in Europe.

There is also the risk of wild fluctuations in foreign-exchange rates, which can unexpectedly lower the value of investments. The value of the peso in Argentina, for example, plummeted five years ago when the government was forced to devalue the currency during the largest foreign debt default in history.

Money managers have to ask themselves fundamental questions. “What are the rules that allow me to get in and out quickly?” said Alka Banerjee, vice president of global index management for Standard & Poor’s. “Is there a derivatives market which allows me to hedge my exposure? These are the kinds of infrastructure that a stock market needs for it to become basically more accessible to any global investor.”

One benefit investors should consider, noted Rohm of T. Rowe, is the frontier markets’ low correlation to developed markets, offering diversification to individual portfolios.

Many emerging markets fell during the turmoil sparked by U.S. mortgage and credit markets this summer. Not so frontier markets. One reason is that they often deal only in equities and bonds and don’t have derivatives markets. Many of the exotic securities backed by subprime mortgages, the catalyst for the credit crisis, are traded in derivatives markets. “They have no exposure to these sort of instruments,” Rohm said.

On the other hand, many frontier-market economies are dependent on commodities. While raw materials and oil have high prices now, volatile commodity prices and a reliance on commodity exports have been a source of risk for developing countries. But some frontier countries are widening the base of their economies.

Debt relief from the World Bank has freed up African governments to spend their money on infrastructure, said Rohm, a native of South Africa who has traveled extensively across the continent. The emergence of the middle-class consumer has created opportunities for consumer-oriented companies.

“It’s very visible,” said Rohm, who recently returned from a trip to Nigeria, Ghana, Kenya, Uganda and Zambia. Before, “you wouldn’t have seen people walking around with mobile phones. There are a lot of new cars on the road. You see new roads being built. You see new factories being built . . . managements are very happy to meet with investors. They’re producing regular financial statements, which allows us to do due diligence on these companies. ”

We have edited the above article to highlight important issue relative to an investor’s pysche … thanks a trillion

 

Making Tones Of Money – Kenyans Taking Advantage Of Their Stock Market

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By Stephanie McCrummen

Washington Post Foreign Service

Easy Steps For Zambians Abroad To Invest in LuSE

NAIROBI — One ordinary afternoon in a bright, marble-floored lobby downtown here, the following conversation took place between two women, a government worker and a self-employed soapmaker.

“I bought KenGen at 9.90 shillings,” said the government worker, Josephine Nduta, referring to her stake in the initial public offering of Kenya‘s power company last year. “I sold them at 28 — I made a lot of money!”

Traders conduct transactions at computers on the floor of the Nairobi Stock Exchange. Until 2005, the exchange traded stocks using a paper system. (By Stephanie Mccrummen — The Washington Post)   In Depth Tragedy in Darfur Explore the history, people and politics behind one of the world’s bloodiest conflicts. A Widening Crisis Video journalist Travis Fox documents the growing humanitarian crisis in eastern Chad, where violence is spilling over from neighboring Darfur, Sudan. AIDS in Africa The Washington Post’s Craig Timberg reports on the impact of AIDS in Africa and efforts to combat the devastating disease. Turmoil in Somalia Ethiopian-backed troops push Islamic fighters from the capital, renewing hopes that a viable secular government can be established. Wake Up Call Photo essay by Patrick Davison documents life in Vukani, a squatter camp near Grahamstown, South Africa.

“I also made money on that,” said Mary Kariuki, the soapmaker, recalling how she used the $1,000 to pay her children’s school fees. “I bought 3,300 shares.”

The two women carried on about liquidity and profit margins, and recalled with pride attending the first shareholder meeting of KenGen this year, an event so huge that it had to be held in the city’s largest soccer stadium. About 200,000 people from all corners of the country came like so many newly minted executives.

“I felt so good,” Kariuki recalled. “It was just normal, common people. People dressed well. What impressed me was the number of old women — they were coming in their traditional clothes. They were telling me, ‘Yes, we bought!’ ”

Stock market fever is sweeping Kenya and other sub-Saharan African countries such as Tanzania, Uganda, Nigeria and Zambia, where stock exchanges, along with national economies, have shown steady gains in recent years as people who have traditionally invested in cows or land are learning to trust in the abstraction of corporate shares.

Perhaps nowhere has the idea caught fire more quickly than in Kenya. With investment banks conducting education campaigns in rural areas and daily newspapers thick with personal finance sections, the Nairobi Stock Exchange has transformed in recent years from a rich man’s club into a computerized, mass-appeal institution.

Since 2002, the number of investors has risen from 50,000 to more than 750,000, according to stock exchange executives, with much of that growth coming from rural areas. The exchange’s total value has jumped from $1 billion to $12 billion, amounts that are predicted to swell again following the biggest initial public offering in Kenyan history.

Cellphone giant Safaricom, expected to go public later this year, has attracted such foreign investment banks as Goldman Sachs to Nairobi for the first time, offering their services, and analysts expect that as many as 3 million individual investors in this country of nearly 36 million will participate.

“People are coming on a daily basis just to see what it’s about,” said Chris Mwebesa, 36, chief executive of the Nairobi exchange. “We’re seeing more rural folks coming to the market, working professionals, retirees, farmers, young people, even students.”

The boom has its skeptics, especially in a country with a history of entrenched corruption. And while people such as Nduta have made money on the whole — she is using some of it to electrify her house — she is also aware of the risk of losing big. Even so, the boom underscores a feature of life in Africa that often gets lost amid more prevalent images of a continent in perpetual collapse: dogged optimism.

A recent opinion poll by the Pew Global Attitudes Project found that people surveyed in 10 African nations were on the whole optimistic about the future. In Kenya, 78 percent of those surveyed said life was getting better, even though a majority also reported that there were times in the past year they did not have enough money for food.

http://www.washingtonpost.com/wp-dyn/content/article/2007/08/25/AR2007082501291.html?sub=AR

 

Zambia 2009 copper output forecast revised

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Zambia’s total finished copper output will hit 1.2 Mt in 2009, against a previous forecast that said the country would produce 1 Mt in 2011, a senior industry official said.

Tim Henderson, the chief executive officer of Mopani Copper Mines (MCM), said production of copper would rise faster than expected because the life of the vast copper and cobalt mines had risen due to exploration and modern mining technologies.

“Copper Production has increased from 257,000 t in 2000 to over 500,000 t in 2006 (and is) projected to reach 1.2 Mt by 2009,” Henderson said late on Tuesday.

Zambian President Levy Mwanawasa said in April the southern African country was set to double its annual copper output to 1 Mt by 2011 following discovery of new reserves.

Henderson, who was speaking in Livingstone, 480km south of Lusaka at a Zambia economic and business forum, said the southern African country would have to invest in infrastructure such as roads and energy to handle larger volumes of copper.

“Zambia is not the only country working hard to attract FDI (foreign direct investment) in mining… we should therefore not relax. Privatisation has been a great success and boosted the economy through huge investments and job creation,” he added.

Zambia’s state run copper mines were privatised starting in 1998 when Chinese investors purchased the Chambishi Copper mine.

Henderson also said Mopani had in principle agreed to renegotiate development agreements with the government, which plans to raise mineral royalties to 3.0% from 0.6% and corporate tax to 30% from 25%.

“In principle, mining companies are willing to renegotiate the agreements. Any future change in the rate of mineral royalties should be linked to copper prices,” Henderson said.

Mopani, which operates the Nkana mine, Mufurila copper mines and the Mufulira Smelter is the country’s second largest copper producer. MCM is a joint venture of Canada’s First Quantum Minerals and Glencore International AG of Switzerland.

Mwanawasa has been pushing for greater foreign investment, including Chinese, in the country’s copperbelt region in a bid to modernise ageing mines and raise exploration and production.

http://metalsplace.com/news/?a=13661

 

Made Out Of Plastic – 787 Dreamliner

EVERETT, Washington (AP) — Boeing has raised the curtain on its first fully assembled 787 to an audience of thousands who packed into its wide-body assembly plant for the plane’s extravagantly orchestrated premiere.

“Our journey began some six years ago when we knew we were on the cusp of delivering valuable new technologies that would make an economic difference to our airline customers,” Mike Bair, vice president and general manager of the 787 program, told the crowd.

             

“In our business, that happens every 15 years or so, so you’ve got to get it right.”Boeing Chief Executive Jim McNerney said the 787 will bring about a “dramatic improvement in air travel: to make it more affordable, comfortable and convenient for passengers, more efficient and profitable for airlines, and more environmentally progressive for our Earth.

“Boeing has won more than 600 orders from customers eager to hold the jet maker to its promise that the midsize, long-haul jet will burn less fuel, be cheaper to maintain and offer more passenger comforts than comparable planes flying today.

The 787, Boeing’s first all-new jet since airlines started flying the 777 in 1995, will be the world’s first large commercial airplane made mostly of carbon-fiber composites, which are lighter, more durable and less prone to corrosion than aluminum.To date, Boeing has won 677 orders for the 787, selling out delivery positions through 2015, two years after Airbus SAS expects to roll out its competing A350 XWB. Thirty-five of those orders came Saturday, with Air Berlin ordering 25 and a Kuwaiti company taking 10 for Kuwait Airways.

In a rare tip of the hat to the competition, Airbus congratulated Boeing on the 787, whose commercial success has chipped away at the edge the European plane maker once held over its Chicago-based rival.

“Even if tomorrow Airbus will get back to the business of competing vigorously, today is Boeing’s day — a day to celebrate the 787,” Airbus co-CEO Louis Gallois said in a letter to McNerney.

“Today is a great day in aviation history. Whenever such a milestone is reached in our industry it is always a reflection of hard work by dedicated people inspired by the wonder of flight,” the letter said.Airbus customers forced it to redesign the A350, which pushed back production. Airbus also has faced problems with its A380 superjumbo, which has been hit with delays that slashed profit projections for Airbus’ parent company, European Aeronautic Defence & Space Co.

Boeing hired former NBC “Nightly News” anchor Tom Brokaw to serve as master of ceremonies for the 787 premiere — held, probably not coincidentally, on 7-08-07 — which was broadcast live on the Internet and on satellite television in nine languages to more than 45 countries.

The company rolled out red carpet and set out roughly 15,000 seats for spectators at one end of the 787 factory north of Seattle.The company invited thousands of its employees and retirees to watch via satellite at the NFL stadium where the Seattle Seahawks play, and it hosted viewing parties for 787 customers and suppliers in dozens of other locations around the globe.

Final assembly of the first 787 started in late May, after a gigantic, specially outfitted superfreighter started flying wings, fuselage sections and other major parts to Boeing’s wide-body plant, where they essentially get snapped together, piece by huge piece.

Once production hits full speed, the company expects each plane to spend just three days in final assembly, but this time, Boeing workers spent several weeks installing electrical wiring and other innards that suppliers will eventually stuff into their sections of the plane before they’re delivered to the assembly plant.

Boeing decided to handle that work in-house for the first few planes rather than risk any production delays.Despite a few snags the company says it anticipated — including an industry-wide shortage of fasteners brought on by a surge in demand for new jets in recent years — Boeing officials say nothing so far has threatened to bump the 787 behind schedule.

The first test flight is expected to take place between late August and late September. The plane is set to enter commercial service next May after Japan’s All Nippon Airways receives the first of the 50 Dreamliners it has ordered.

All Nippon Airways executives acknowledged Sunday that Boeing faces production challenges, but they said they’re doing what they can to make sure they get their plane on time next spring.“We know it’s not easy to make that deadline. However, we will support Boeing, and we will work with them so that the deadline can be met,” Osamu Shinobe, executive vice president of corporate planning for All Nippon Airways Co., said before Sunday’s rollout ceremony.

The 787 that debuted Sunday will serve as the first of six flight-test airplanes, while two other planes will be used for static and fatigue tests. The ninth plane off the assembly line will be the first one delivered to All Nippon.

The 787-8, the first of three 787 models Boeing has committed to making, has an average list price of $162 million, though customers typically negotiate discounts on bulk orders.

Copyright 2007 The Associated Press. All rights reserved.This material may not be published, broadcast, rewritten, or redistributed. 

 

 

North Korea Nuclear Standoff

North Korea is the last Stalinist state on earth, and the latest country to join the nuclear club. Secretive, isolated, heavily militarized and desperately poor, it took steps in the 1990s toward thawing relations with South Korea, but has spent much of the last few years in a still unresolved set of negotiations with its neighbors and the United States over its nuclear program.

North Korea has taken a consistent anti-Washington line since its creation in 1948, denouncing both the United States and South Korea as a puppet of the west. Since the end of the Korean War in 1953 the North has not attacked its neighbor, but to this day keeps large concentrations of troops and artillery focused on Seoul, and has regularly engaged in provocations like kidnappings, submarine incursions and missile tests over the Sea of Japan.

The country’s founder, the so-called Great Leader, Kim Il-sung, was succeeded at his death in 1994 by his son, the “Dear Leader,” Kim Jong-il, an eccentric playboy invariably seen (in his few public appearances) in platform shoes and a khaki jumpsuit.Read More… In 1994, North Korea reached an agreement with the United States to shelve its nuclear program. In 2002, President Bush included Pyongyang in the “axis of evil,” and American officials charged later that year that North Korea had violated the earlier agreement.

Pyongyang declared the agreement void and expelled international nuclear inspectors. China joined with the United States, South Korea, Japan and Russia for what became known as the six-party talks.

In 2005, an agreement was reached and then scuttled by North Korea, angered by an American-led crackdown on banks doing business with it.On Oct. 9, 2006, North Korea set off a nuclear device – a small one, which apparently did not detonate completely, according to experts on seismic recordings. Governments around the world condemned the blast, including China, which has been Pyongyang’s chief protector for decades.

In a policy shift, American officials agreed to meet with North Korea for one-on-one talks concerning the financial crackdown.In February 2007, an agreement was reached under which North Korea would shut down its plant at Yongbyon, at which it had manufactured nuclear bomb fuel, in return for shipments of fuel oil.

Early deadlines for action under the agreement came and went, with North Korea charging that funds from frozen bank accounts had not been returned. But after the funds made their way back to Pyongyang after a complicated series of transactions, the government announced in June 2007 that it was allowing international inspectors to return. – Ford Burkhart, May 31, 2007… thanks a trillion

Brainwave R Mumba, Sr. 

CEO & President – Zambian Chronicle 

Copyrights © 2007 Zambian Chronicle.  All rights reserved. Zambian Chronicle content may not be stored except for personal, non-commercial use. Republication and redissemination of Zambian Chronicle content is expressly prohibited without the prior written consent of Zambian Chronicle. Zambian Chronicle shall not be liable for any errors, omissions, interruptions or delays in connection with the Zambian Chronicle content or from any damages arising therefrom.

Zambian Chronicle is a wholly owned subsidiary of Microplus Holdings International, Inc. 

Copyrights © 2007 Microplus Holdings Int., Inc. 

http://topics.nytimes.com/top/news/international/countriesandterritories/northkorea/index.html?excamp=OVGNnorthkorea

 

No Deals With North Korea, Please!!!

Recent reports in the Zambian media that our own Zambian Enterprise has signed a communiqué with North Korea is not only disturbing but also flabbergasting …

NO DEAL IS A GOOD DEAL WITH NORTH KOREA DESPITE THE NEW DEAL!!!!

Firstly, North Korea has nothing to offer our beloved enterprise and even if they did, they are not a kind of companion we should be identified with as a nation.

Mr Shakafuswa is quoted as saying … “North Korea was willing to provide technical assistance to Zambia by training Zambians in agriculture, construction, information technology and sports.” 

Secondly, North Koreans are starving and are currently asking for food and energy from western countries in exchange for nuclear disarmament, so how are they going to train our own nationals in agriculture?

Thirdly, a visit to Pyongyang shows a great contrast with a visit to Seoul – South Korea. The two are worlds apart in terms of infrastructure development; so what are the North Koreans going to teach our people in the area of construction?

Fourthly, what information technology would come out of North Korea when they still have not fine-tuned even their short, medium and long range missile technology which expertise seems to be the only viable one they have … and what major sports on a global scale do the North Koreans champion? 

Lastly, the Zambian Enterprise is truly in a hurry to develop but we need to choose our friends wisely using a high level of meritocracy instead of sheer mediocrity … North Korea is a rogue nation with nothing to offer us and the only thing one would ever think of is their interest in our uranium which exists in abundant supply.

This could by far be the greatest driving national interest on their side and Zambia should shun them at all costs. You are measured by what company you keep and we urge the government to reconsider this so-called New Deal.

We would hate to wake up some day and the world has been embroidered in a nuclear holocaust with North Korea at the helm using Zambian uranium … thanks a trillion

Brainwave R Mumba, Sr. 

CEO & President – Zambian Chronicle 

Copyrights © 2007 Zambian Chronicle.  All rights reserved. Zambian Chronicle content may not be stored except for personal, non-commercial use. Republication and redissemination of Zambian Chronicle content is expressly prohibited without the prior written consent of Zambian Chronicle. Zambian Chronicle shall not be liable for any errors, omissions, interruptions or delays in connection with the Zambian Chronicle content or from any damages arising therefrom.

Zambian Chronicle is a wholly owned subsidiary of Microplus Holdings International, Inc. 

Copyrights © 2007 Microplus Holdings Int., Inc.

 

K1.9 Trillion – Unexplained

By Times Reporter

http://www.times.co.zm/news/viewnews.cgi?category=4&id=1183707579

THE Office of the Auditor General’s report of 2005 has revealed unexplained balances of more than K1.9 trillion between Bank of Zambia (BoZ) and the ministry of Finance and National Planning headquarters.

Auditor General, Annie Chifungula, disclosed in Solwezi during a tour of North-Western Province that K1, 976,080,583,818 was not tallying between BoZ and the ministry of Finance.  She said this on Wednesday when her delegation met provincial heads of Government departments.

She told departmental heads that her delegation was not in the province to find faults, but to help resolve issues before they reached the Public Accounts Committee (PAC) of Parliament. “You are the key persons as you initiate payments before controlling officers come in.

Let us resolve issues before they reach Public Accounts Committee, which has been very active this year,” she said. Ms Chifungula said her tour of provinces was also to learn from the officers because some questions from the Public Accounts Committee sometimes seemed embarrassing as issues that should have been resolved were left unanswered.

In agreeing with a call for the strengthening of the internal audits in Government departments in North-Western Province, Ms Chifungula said it was a pity that while there were no shortages of auditors in Lusaka, other regions were understaffed.She bemoaned how some auditors when transferred from Lusaka resigned to join private companies. 

Ms Chifungula suggested that recruitment of staff should be localised. When North-Western Provincial director of health, George Liabwa, asked if time management was also audited, to which Ms Chifungula answered that time was considered during performance audits.

When asked how late banking should be dealt with, the Auditor General said it was unacceptable for some officers to take as long as four months to bank State funds. “There is no such place where it takes four months to get to a bank,” she said. Provincial Permanent Secretary, Richard Salivaji, appealed to the heads of department to follow guidelines in the release of funds, saying the Government ran on systems.