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Africa: Sub-Saharan markets lose their glitter

Barely a day goes by without a new craze for so-called frontier markets in Africa being mentioned somewhere. But are the returns worth the fuss?

As a whole, stock markets in sub-Saharan Africa outside South Africa have lost slightly less than the 13% the S&P 500 lost in the first eight months of 2008. But even this year markets that are more developed might have made a better investment given that it is so much easier to get money out of them.

The Johannesburg Stock Exchange, for example, which is more than five times the size of all other sub-Saharan African stock exchanges combined, has fallen around 11% this year, compared with a fall of about 10% in the rest of the sub-Saharan African stock markets combined.

The many new frontier or Africa funds created in the past two years have had problems deploying all of their money because of the difficulty of investing in stock markets in sub-Saharan Africa. But as Christopher Hartland-Peel, African equities analyst at London frontier markets specialists Exotix, jokes: "The decline of share prices across the continent’s markets may have probably made investors quite happy about this."

Frontier markets in Africa have fallen less than expected over the past year, partly because they are relatively isolated from the rest of the world.

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