Spio-Garbrah and Seruma both think African markets may face further instability this year. But Spio-Garbrah emphasizes investor skepticism of government debt rather than equity markets, pointing to large interest-rate spikes in recent Egyptian and Nigerian bond issues, popular sources for emerging market bond funds. Seruma, on the other hand, said there will be more volatility surrounding this year's 14 African presidential elections, twice the number in 2010. However, because most of these African leaders have not been in office for as long as Mubarak, Seruma thinks similar uprisings are far from likely, and African stocks will continue their long-term, bull-market rise once the Egyptian situation cools down.
[See US News & World Report's Fund Category: Emerging Markets Bond]
This is good news for Africa enthusiasts. While the continent has become a hot market for investors searching for high returns and low price multiples, markets still haven't reached 2007 levels. Inflows of foreign capital, for instance, haven't yet reached that year's high of $87 billion, according to a report from McKinsey.
What's more, the recent uprisings have only erased gains from the last two months, as foreign investors reorganized their portfolios and entered these markets en masse at the end of 2010 creating artificially higher prices. If you didn't follow the crowd at the end of last year, the uprisings may have just handed you an opportune entry point.
A recent AP report describing a panel discussion at the World Economic Forum in Davos sums up the continent's continued pull: "It's hard to find anybody in government or business who isn't optimistic about Africa as the hot new continent for trade and investment."