Africa beats China in valuation, says DWS

FRANKFURT – Investors should prefer Africa over China to benefit from undervalued stocks because markets are overstating Africa’s political risk, a fund manager at Deutsche Bank unit DWS said.

‘Regarding growth, China is clearly ahead, but in Africa you get more for your money as an investor,’ Jens Schleuniger, manager of the DWS Invest Africa LC fund, told Reuters in an interview. Fear of an asset bubble in China – fuelled by excessive spending that could lead to inflation – have raised concerns about where to invest should the country’s growth engine stall.Schleuniger said growth prospects in Africa were good, with a noticeable pick-up in production, foreign direct investment (FDI) and activity in the private equity sector.’Few know that Africa is the second-most dynamic growth region behind Asia. However, there is a lack of trust as many investors attach too much importance to political risks. I believe this is partly exaggerated.’Schleuniger’s fund, with about US$124 million, has performed in line with its benchmark, the S&P Africa 40 Net Return Index, this year. Orascom Construction, Tullow Oil and resources group First Quantum Minerals are among its top 10 holdings.’Above all, you will find investment opportunities in the three Cs – commodities, construction and consumption,’ he said.Schleuniger said this year’s soccer World Cup in South Africa – where about a quarter of the fund is invested – may provide limited upside to the continent’s growth prospects. – Nampa-Reuters