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Investing Trends In South Africa

This piece seeks to explore the latest investing trends in South Africa with a view to providing information on some of the risks and information on how to get the best odds of success.

Jeff Broth

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Africa is turning out to be a magnet for foreign investors and the trend won’t slow down in the short to medium terms.

The investment environment in Europe and America has reached a point of maturity and investors are looking to emerging markets to catch the next wave of investment opportunities with massive ROI.

At the start of the decade, many investors flocked to the BRIC nations in the expectation that they’ll become the next economic powerhouses by 2050. However, South Africa has shown strong signs of an economic revolution that could surprise investors globally. Now, smart investors are talking about investing in BRICS, which now include Brazil, Russia, India, China, and South Africa. The emerging markets of Africa and Asia-Pacific are turning out to be the next destination for the discerning investor.

Related: Trends In Investing For Entrepreneurs In South Africa

Investing trends in South Africa

1. Commodities

It is practically impossible to talk about investing trends in South Africa without talking about its vibrant mining sector. Idan Levitov from anyoption notes that “South Africa is the perfect destination for investors who want to invest in a vibrant commodities or commodities derivatives market”. South Africa’s economic policymakers have come to a realisation that commodities could be valuable building blocks for creating a global economy and they are working hard to provide an enabling environment for trading both hard and soft commodities.

In case you are skeptical about trading commodities in South Africa, it might interest you to know that the U.S. Geological Survey estimates that South Africa holds about 50% of the world’s gold resources. Apart from gold, South Africa is also home to a number of precious metals such as diamonds, platinum, and silver among others.

2. Real estate

The real estate market in South Africa has taken off and many international real estate firms have found the South African real estate market to be lucrative. South Africa is now home to malls, skyscrapers, business districts, hotels and apartment complexes on par with what it available in Europe and the Americas. Interestingly, many global firms with strong focus on real estate developments are using South Africa as a launch pad to the rest of Africa. Johannesburg, Cape Town, Durban, and Soweto are some of the biggest real estate markets in the country.

3. Equities

The Johannesburg Stock Exchange currently tops the list for investments in the capital markets among emerging market equities. The JSE is a 127-year exchange that keeps booking gains even when the general economic outlook of the country looks bleak. Interestingly, the JSE has impressive upside potential ahead and Dominic Bunning, emerging markets FX strategist at HSBC notes that “South Africa still has a lot of challenges and there is the Fitch rating decision to come this month, but they haven’t been downgraded … cyclically there is still room for the rand to do a bit better.”

Related: Investing In Your Future

Risks to investing in South Africa

Investing in South Africa can be richly rewarding; yet, the country has some unique issues that could raise the risk exposure for investors. One of the major risks to investing in South Africa is nationalisation and expropriation activities by the South African government. For instance, there’s a pending amendment to the 2002 Mineral and Petroleum Resources Development Act. The change if passed into law would allow the South African government to obtain a 20% stake in new oil and gas businesses and the government can buy an undisclosed amount of stake at an “agreed price”.

Robert Besseling, Executive Director at EXX Africa, a consultancy, notes that “there are various… bills which are waiting for this Investment Bill to be finalised.” “It’s essentially these bills… that are increasing the risk for foreign investors.”

Another major problem making it hard to do business in South Africa is shortage of skilled labor and high level of unemployment. The official numbers from the government places unemployment at about 22.5% but the real number is closer to 40%. The lack of skilled labor makes labor expensive in South Africa in relation to other African countries. The high unemployment rate also means that there is a large number of unemployed youths who have less motivation to shun violence, mob actions, riots, and crime.

Lastly, if you want to invest in South Africa you should be prepared to deal with a systemic corruption that has led to infrastructure shortcomings. The country has a good road network and communications seems to be developing quite rapidly. However, energy is a major issue and businesses have to contend with epileptic power supply and predictably consistent blackouts.

Jeff Broth, a business writer and advisor. Consulted for SMB owners and entrepreneurs for 7 years now. Mainly covering finance, stocks and emerging fintech trends.

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2 Comments

2 Comments

  1. Fred Johnson

    Jun 20, 2016 at 19:44

    Ref Gold. Agreed resources underground and grams per ton are components to consider but surely ‘market perceptions’ and the the negative interest rate ‘experiment’ in many countries in Europe and of course, Japan, is going to drive money out of banks/bonds looking for a ‘positive return’? Soon the dollar will go up for while and then as USA exports drop, it will have to go into real negative rate. This will continue to drive up gold and silver. So getting into some not overpriced shares in these mines and even holding gold & silver would offer a better investment? The worlds financial markets are poised on a knife edge and are a disaster looking for a trigger to set it off another 2008- but more intense.Why?There’s too much debt and printing of money and this will be the downfall of ‘fiat’ currencies and, regretfully,those people who are not seeking ‘alternatives’ are going to loose wealth,, again.

  2. mangethe_z

    Jul 10, 2016 at 05:32

    this article mentions commodities as one of the most attractive investments. when you look at the risks involved with investing in SA that you mentioned the whole outlook on investing in SA suddenly seems very bleak. the best way to invest in SA for me would be to target the 40% unskilled and unemployed market. can you put a monetary value to this 40% or is it just a cinder-block to SA’s neck that will make sure that the country drowns in its own vomit of corrupt politicians…

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(Infographic) The 10 Things You Should Cover In Every Investment Pitch

If you want to wow potential investors, you need to cover your bases.

Matthew McCreary

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If you’ve ever watched Entrepreneur’s original series, Elevator Pitch, then you’ve probably seen smart founders make dumb mistakes while pitching their ideas to potential investors. They might flub an answer or get tongue-tied, or they might just be a little boring. Other times, you might notice that something seemed off about a pitch, but you can’t quite put your finger on why.

Investors are gambling every time they put money into a new project or idea. Your job when pitching is to prove to them that you’re worth the risk. That means you’ll need to not only show them the possible upside of what they have to gain, but also be clear about what they could possibly expect to lose and their odds. In other words, you need to give them a holistic view of what you do, not just the one good idea.

You might have pitched an investor yourself and thought you crushed it, only to hear that the investor isn’t interested. If that’s the case, there’s a chance the pitch was missing one of 10 essential elements.

This infographic by Buffalo 7 breaks down 10 slides you should have in your next investment pitch deck. If you’re not presenting formally, though, you can still keep track of these aspects in your head and make sure you cover each one. They include:

  1. The vision, where you concisely explain your idea.
  2. The problem. Why is your vision necessary or helpful?
  3. The opportunity. What is the market size, and how can you position yourself to earn a share of it?

Related: How To Pitch Your Business, Product Or Idea To Industry Experts

This is just the start, though. Check out the infographic below to see the rest of the slides you need when pitching investors.

1541174287_investment-pitch-infographic

This article was originally posted here on Entrepreneur.com.

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‘Shark Tank’ Investors Reveal Top 5 Tips To Make Your Business Famous

Is your business worthy of fame? If so, pay attention to what the Sharks have to say …

Eric 'ERock' Christopher

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Shark Tank enters its tenth season as popular as ever. Over the past decade, millions of people have watched fascinated as entrepreneurs pitched their business ideas and startups in the hopes of winning an investment and support from self-made millionaires and billionaires.

The multi-Emmy® Award-winning reality-based show has had a tremendous impact on the business world and has been a major influence on the increased popularity of becoming an entrepreneur. Over the years, the show has evolved into one of the world’s top platforms to launch a business and recently reached an astonishing $100 million in deals offered in the Tank.

I was recently invited to attend a private event hosted on the set of Shark Tank to celebrate their 10th season and met with all the Sharks and most of the guest Sharks for the current season. This year’s guest list includes luminaries:

  • Charles Barkley, Hall of Fame NBA star and TV analyst
  • Alex Rodriguez, legendary baseball player and businessman
  • Rohan Oza, an iconic brand builder and marketing expert
  • Sara Blakely, founder and owner of SPANX brand
  • Matt Higgins, the co-founder and CEO of RSE Ventures and vice chairman of the Miami Dolphins
  • Bethenny Frankel, TV celebrity, author, and founder of Skinnygirl brand
  • Jamie Siminoff, the CEO of RING, who rejected an investment offer in season 5, but went on to sell his company to Amazon for a whopping $1 billion.

My better half was also invited, and we arrived promptly on time at Studio 24 inside of Sony Pictures Studios in Culver City, CA. We were greeted by the cordial staff who informed us that the Sharks were still filming the last takes of the day. After several minutes, we were invited to chat with the Sharks on the main floor where nervous entrepreneurs excitedly pitch their companies to the investors under the bright lights of the studio set.

I was curious to know what excited the Sharks the most about their tenth season and what they believed to be the best advice for an entrepreneur to help make their business famous.

1. Create an ingenious product

When asked, Lori Greiner said, “It’s a mix, right? Of smart marketing and ingenious product. For example, Scrub Daddy was a technology. So, taking that one sponge, which was revolutionary, changed the whole sponge arena. We now have, to date, 20 different SKUs, and we have 30,000 new retail locations and 170 million in sales. That’s what takes it from one idea to a global brand.”

Of course, skillfully promoting your product on a platform like QVC is another excellent way to make your business famous. The day after the Scrub Daddy episode aired, Greiner helped CEO Aaron Krause sell their entire inventory of 42,000 sponges in less than seven minutes on QVC.

Related: 6 Great Tips For A Successful Shark Tank Pitch

2. Leverage social media marketing

barbara-corcoran

During my chat with Bethenny Frankel, she stressed, “Social networking is so important. Also being a little bit disruptive now … and you have to be creative. You have to be creative. The President was the most disruptive candidate that there’s probably ever been in history. He got people’s attention, and young entrepreneurs need to get people’s attention in some way. So be a little disruptive.”

Matt Higgins responded, “I’d say that you have to understand social and digital marketing. You can’t survive unless you understand Instagram, Snapchat or all the tools out there. You have to be contemporary.”

Barbara Corcoran claimed, “Every one of us successful entrepreneurs, for the last two years, were phenomenal at social media. It’s true. No exceptions.”

No smart entrepreneur will deny the power of social media when it comes to making your company famous. With more than 2 billion people worldwide using some form of social media, any business can put their business in front of a large audience, especially if they can create content that goes viral.

3. Build a community

Daymond John stressed the value of building a community. “You’ve got to build a community,” stated John. “Nobody needs to buy anything new in this world. They only buy it because there’s some form of community and/or need that you are supplying for them.”

John speaks from experience. He built a successful clothing empire by creating a vast community of his own via his clothing brand FUBU. John wisely invested in celebrity endorsements, making him an early pioneer of modern influencer marketing.

If you lack the resources to build your own community from scratch, you can leverage the power of others. Partnering with influencers who have cultivated their own communities allows you to introduce your product or service to larger audiences. In fact, some consider Shark Tank to be the world’s largest business influencer platform.

4. Devise a publicity hook to win earned media coverage

Barbara Corcoran also said, “I’d say you need a publicity hook. Some hook, angle or gimmick that grabs the attention unfairly from your competitors.”

Remember, Shark Tank is a unique combination of reality television, business acumen, and entertainment. Doing something unique, different, or disruptive can get you significant media attention and abundant free publicity… especially if you’re able to leverage that publicity and captivate the show’s producers, who decide your fate as to whether you’ll appear on the show.

Regardless if you want to appear on Shark Tank or not, being featured in the media is a way to differentiate your business from the competition and reach a broader audience. Be creative and willing to take educated risks when it comes to getting noticed by the media. You should always be actively building relationships with media representatives and ask for their insights when formulating your plan.

Related: Shark Tank Funded Start-up Native Decor’s Founder on Investment, Mentorship And Dreaming Big

5. Know your strengths and stay focused

When I asked for billionaire Mark Cuban’s insights, he thoughtfully replied, “Knowing your unique advantages, play to that, and your strengths. And focus. You know, what happens is very often people start with an idea, get a little bit of traction, then it gets hard. And when it gets hard, they start looking for other things to do as opposed to playing to their strengths. Because businesses aren’t supposed to be easy. You know, if they were easy everybody would already be rich, and we’d all be sitting on a beach somewhere. And so, when it gets tough, you gotta dig in and work hard. I’d say the final thing I’d add is that sales cures all. There’s never been a business that succeeded without sales. So, if you focus on selling … if you’re able to sell … and that’s something that is one of your core competencies, then you’ll be okay.”

These are wise words from one of the world’s few billionaires.

This article was originally posted here on Entrepreneur.com.

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The Best Way To Get Your Teenager To Start Investing Right Now

Jeff Rose advises a young fan on where to start his investment journey.

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In this video, Entrepreneur Network partner Jeff Rose talks about receiving a letter from a young investor, who is looking for advice on how to begin investing.

Rose talks about the act of actually doing the investing versus worrying about reading books or asking others about the process. Taking action gets the most results, since you are able to make mistakes and start the learning process. Taking action also leads to more experience, which is to say if you begin investing as a teen, you will be much more savvy about investing as a twenty-something.

In answering this young investor’s concern about investment direction – the fan hopes to balance short-term gain and long-term gain, as well as to establish some padding for a future business – Rose turns him in one specific direction: A Roth IRA. When he was younger, Rose didn’t even know what a stock was until far into his college years; during this time, he discovered the Roth IRA and learned of its compounding power, as well as the accessibility of an initial investment.

As another route, Rose also mentions starting a business. This path, Rose explains, will help you achieve the most return on investment.

Related: Making International Investing Simple And Transparent – CybiWealth Digital Platform

Click on the video to hear more tips for a younger investor.

This article was originally posted here on Entrepreneur.com.

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