When Renaissance Capital first began its push into Africa in 2007, acquiring a Kenyan stockbroking licence and establishing a number of regional offices, it marked a surprise departure for a Moscow-headquartered bank that had previously focused almost exclusively on Russia and the former Soviet states.
Four years on, and RenCap has firmly established itself as the first port of call for many investors in terms of African macro, equity, debt and sectoral research. It leverages its presence and on-the-ground knowledge of markets across sub-Saharan Africa, combining this with a strong focus on cross-emerging market linkages – a research house for the south-south era.
Its China In Africa report, published in April and co-authored by chief economist Charles Robertson and Lucy Corkin of the Africa-Asia Centre at SOAS, University of London, stood out from a crowded field of Sino-African analysis.
It provided the most detailed attempt to date to make sense of the vast amount of competing and contradictory trade and FDI numbers charting China’s involvement in the continent. It also offered a detailed country-by-country analysis of African nations’ trade and investment links with China that eschewed the sweeping overviews and rushes to judgment of many of its competitors. Instead, it favoured meticulously researched and hard-to-access data, deal and trade overviews.
RenCap’s Africa coverage combines thought-provoking analyses with a good track record on specific policy, debt and equity market calls.
Furthermore, its analysts have used RenCap’s pan-emerging market presence to produce a series of comparative pieces assessing the relative merits of equities and sectors across emerging markets. A good instance of this was a comparison of the consumer goods sectors in Russia and South Africa, which weighed up the relative merits of both sectors for global and regional equity investors.
RenCap faces stiff competition, however, reflecting growing interest and confidence in the African investment thesis.
Standard Bank continues to produce comprehensive macro, cross-asset and asset-class specific analysis across sub-Saharan Africa, making a series of strong calls, including recommending going short on the Kenyan shilling and long on the Nigerian naira at the beginning of this year, positions that would have proved profitable for those that heeded.
Standard Chartered’s head of Africa research, Razia Khan, has also been busily ramping up the EM-focused bank’s Africa research offering this year, launching a new Africa Focus series in June, combining analysis of continent-wide trends with in-depth country-specific analysis.
Exotix also continues to offer in-depth analysis of African sovereigns, and correctly called the potential for political unrest in Côte d’Ivoire, cautioning against political risk last year when the country’s 2.5% bonds due in December 2032 rose above 60¢ on the dollar last November. It instead advised investors to sell after the second-round election results on December 6; the price subsequently fell from 54¢ to 35¢ early this year.
Finally, Togo-headquartered Ecobank has doubled its research headcount and expanded its product offering over the past year, with a new research office in London complementing on-the-ground analysts based in five countries across the region it terms ‘Middle Africa’.
This focus enables it to offer in-depth analyses of trade and commodity flows across west, central and east Africa, and, because it continues to build up its coverage, it will certainly be one to watch in 2012.