Absa Capital, the corporate and investment banking division of Absa Bank Ltd, and affiliated with Barclays, believes the future of Exchange Traded Funds (ETFs) in Africa remains favourable for investors, as well as for the respective local economies.
In yet another move signalling the bank’s commitment to further grow the range of investment products across the continent, on 22nd August, 2012, ABSA Capital listed the NewGold ETF on the Ghana Stock Exchange (GSE). The NewGold ETF became the first ever ETF to be listed on the GSE.
Dr Vladimir Nedeljkovic, Head of Investments at Absa Capital said: “The listing of the NewGold ETF on the GSE helps to further expand the Ghanaian investment market. The capital markets in Africa are still very underdeveloped presenting an opportunity for significant growth in the region.”
“We believe that ETFs present a gateway to this growth , but further market maturity is required, especially when assessing just how far more extensive global ETF offering are,” added Nedeljkovic.
The listing of the NewGold ETF on the GSE is expected to help develop the investor market in one of Africa’s fastest growing economies by widening the choice of asset classes available to local investors. The NewGold ETF will also help facilitate an increase in liquidity on the GSE. A total of 400,000 of the NewGold ETF securities were listed on the GSE. There are now four African countries (South Africa, Botswana, Nigeria and Ghana) where the NewGold ETF, South Africa’s largest ETF and the fourth largest gold ETF in the world, is listed.
As of 1 August 2012, NewGold’s assets under management were USD 2.15bn.
Nedeljkovic continues: “There are currently 4,200 exchange traded products listed globally with 89% of the ETFs assets under management being based in US and European products (69% and 20% respectively). An additional 9% is divided between Asia (6%) and Canada (3%). The rest of the world accounts for only 2% of total ETF assets under management.”
As for the African ETF landscape, the South African ETF market is relatively developed. There are over thirty (30) ETFs listed representing with R 38bn (approximately USD4.75bn) in assets under management. Absa Capital currently has 48% of the market share with ten (10) ETFs listed.
Nedeljkovic noted further advantages for Ghana and the respective markets in which foreign liquid ETFs are listed:
· It will help strengthen the regulatory, control and operational frameworks by introducing and implementing best practice international regulatory standards.
· It would provide immediate liquidity to the market and help satisfy the need of investors for liquid securities.
· It would provide investors with an access to previously unavailable asset classes, thus improving diversification opportunities and reducing investment risk.
The NewGold ETF has also proven to be one of the best performing ETFs in South Africa over five years, with a one year annualized return of 22.55%, two year return of 24.76% and a return over three years of 21.66%.
NewGold ETF is a simple and cost effective way of investing directly in physical gold bullion through the GSE.
Nedeljkovic concludes: “The NewGold ETF growth opportunity is inextricably linked to Africa, and will further expand Absa Capital’s suite of products and services across the continent.”
Speaking at the listing, Mr K.S. Yamoah, the Managing Director of the GSE stated: “The NewGold ETF represents a new product offering with assured liquidity and portfolio diversification for investors particularly fund managers and institutions.” He elaborated and praised the collaborative efforts of stakeholders including market operators, the transactional advisors, the SEC Ghana and the Bank of Ghana in making the listing possible.
For more information, contact the Ghana Stock Exchange ([email protected]), your local broker or Absa Capital.
About Absa Capital
Absa Capital, a division of Absa Bank Limited (Absa) and affiliated to Barclays Capital, is a leading South African corporate and investment bank with global reach, offering clients financing, risk management and advisory solutions in a wide range of currencies and structures across the globe.
About Absa Capital ETFs and Index Products
Absa Capital is a leading originator of exchange traded funds (ETFs) in the South African market, and has 48% of the market share based on assets under management. The investment bank has listed and operates ten(10) ETFs. To find out more please visit www.absacapitaletfs.com
Issued at Accra, this 25th
day of August, 2012