Shaun Harris
Taking Stock
Besides the more obvious attractions of the Namib desert, spectacular wildlife and Windhoek Lager, neighbouring Namibia also has a few interesting investment attractions. However, you just have to know where to look for them.
Visitors not familiar with the country soon learn that the line between gonzo and reality becomes extremely fine as soon as you are about 10 minutes outside the capital. Okapuka is a well-stocked game lodge popular among foreign tourists, and the site of Namibia’s latest eco-legend (you know, the counterpart of the urban legend, only wilder).
About six weeks ago the Okapuka lions ate a game warden. Less well known is that a young television cameraman was in the resort at the time, taking some documentary footage. Head office phoned and told him to get to the spot, which he did, but, instead of capturing the scene on film, he abandoned his camera and threw stones at the lions in an unsuccessful attempt to chase them away from the body.
This part of the story is told with dismay by a hard-nosed producer: “If there was any chance of saving the game warden it would have been fine, but the chap was probably killed instantly and the pride of lions had been feeding on him for more than 20 minutes when the cameraman arrived. It could have been international footage, but he didn’t even take a single frame.”
That’s Namibia – harsh, vast and full of surprises. One surprise is that Namibia’s gross domestic product growth – estimated to be in the region of 3% – should outpace South Africa this year, while inflation and interest rates will probably fall.
Spurred by the recovery in world commodity prices, economic growth should accelerate in Namibia over the next two years, says Alwyn van der Merwe, who runs the Old Mutual Namibian Growth Fund.
“World diamond sales are recovering after being depressed due to the slump in Asian economies and fishing should again be a strong sector. The highly successful EPZs [export processing zones] will continue to provide more jobs and boost exports. Prospects for higher earnings from tourism are also bright,” Van der Merwe says.
This he believes will translate into gains of around 20% in equities over the next year.
The potential of some of the Namibian- registered unit trust funds was on show last week at a presentation by Old Mutual Unit Trusts Namibia, which runs two of the 10 Namibian funds.
Van der Merwe’s fund has been a stable performer. The mandate stipulates a well- balanced portfolio, so he missed some of the boost from commodity stocks other unit trusts have benefited from over the short term. However, annualised return over three years has been 12,5%, against the market which provided about 3,5% per annum over the same period, placing the fund fourth out of 31 comparable growth funds in South Africa.
Over the shorter term, however, the star in Namibia has been the Investec Equity Namibia Fund. Launched in May last year, it has provided a total return of 115% since inception, and 52,3% over the past 12 months.
Portfolio manager Roelof Horne says the small size of the fund – only about R5-million – has allowed him to move quickly and aggressively.
He picked up some of the top new listings on the Johannesburg Stock Exchange (JSE)soon after the fund was launched, sold equities and moved into cash before the market crash, then bought equities again late last year before the share price revival in February and March. Horne also moved out of technology stocks and small cap stocks at the right time and picked up some commodities like Iscor and Sappi.
The Namibian sector of the unit trust industry is recorded by Micropal and MoneyMate but not included as part of the South African industry. The sector will probably remain intact after next week’s reclassification of unit trusts as an appendage, rather than part of the larger South African industry. Executive Director of the Association of Unit Trusts Colin Woodin frankly admits he doesn’t know what may become of the Namibian sector. “They’ve never been a part of what we do and are not included in our figures.”
Some of the local Namibian equities – there are only 14 listed on the Namibian Stock Exchange (NSE), excluding dual-listings on the JSE – also look interesting.
Unlike the JSE, there is no ambiguity towards local Namibian shares. They are regarded either as dogs or stars, and the brightest star at the moment is Namibian Breweries, makers of Windhoek Light and Lager, strongly favoured by the health conscious and yuppie market in South Africa.
Namibian Breweries has consistently come through with earnings growth between 25% to 30%, accounts conservatively and has a strong capital base. A possible distribution agreement with Guinness and empowerment partners lend flavour to the share, which is still relatively cheap at the moment in anticipation of an expected listing on the JSE.
It could be well worth buying the share in Namibia before the expected JSE listing, upon which it will probably rerate substantially. That’s easy enough for South African investors. With a common money area and banking system your local stockbroker can probably place an order on the NSE.
It’s a great way of investing for a holiday in Namibia, where the game-viewing and wildlife is truly outstanding.
Just watch out for the lions.