Africa ETFs Could Have Appeal (AKF, GAF)
The ETF Professor views yesterday's news that China offered $10 billion in concessional loans to Africa as further indication that China's appetite for natural resources remains strong and that the world's largest country will go anywhere to get good prices on oil, minerals and other such fare.
There's opportunity here for investors. Of course, most investors know about the vast gold and diamond reserves in South Africa, but other African nations hold immense oil reserves, though they lack the technology to effectively tap their own resources.
South Africa is probably the most developed market on the continent, which is to say investing in Africa is not for the faint of heart. This is a true frontier market.
One ETF play on Africa is the Market Vectors Africa Index ETF (NYSE: AKF), which has significant South Africa exposure, but also some exposure to more emerging economies like Nigeria and Egypt.
Another option to consider is the SPDR S&P Emerging Middle East & Africa (NYSE: GAF), which also tracks equities in the Middle East in addition to Africa. GAF yields 4.36%.
Consider AKF and GAF as ideas for playing increased Chinese demand for oil and mineral resources. Remember Africa has 40% of the world's gold reserves.
