If you live in the USA or UK and are looking for the most convenient way to invest in individual African stocks, your best bet is to acquaint yourself with the growing number of African ADRs and GDRs.
Depositary receipts (DRs) represent the shares of a foreign company. Banks issue these receipts so that investors can trade shares of popular foreign stocks on their local stock exchange without the need to open a foreign brokerage account.
In the US, these instruments are known as ADRs (American Depositary Receipts). Everywhere else in the world, they are known as GDRs (Global Depositary Receipts). I’m not sure why us Yanks need to call them something different. Maybe we just like to think we’re special.
Convenient But With Limitations
Anyway, if you look closely at the list below, you will notice the following:
- The vast majority of African ADRs and GDRs are for South African companies. There’s a handful of Nigerian and Zambian stocks, but very few in relation to those headquartered south of the Limpopo River. Thus, investors who limit their African holdings to ADRs are overly exposed to the South African economy and its currency, the Rand.
- Most African ADRs and GDRs are very illiquid. Roughly half had no trade volume to speak of over the past 30 days, and very few average more than 10,000 shares traded per day. This can cause problems for investors. It’s not always easy to find a willing buyer or seller of the ADRs at the market price.
- Metals and mining companies are disproportionately represented among African ADRs and GDRs. Moreover, they account for roughly half of the ADRs with the highest trade volumes. This doesn’t help investors profit from one of the continent’s most attractive opportunities – the rising wealth of the African consumer.
So African ADRs and GDRs don’t yet offer investors broad exposure to African capital markets. They are, however, a nice way for investors new to the region to get their feet wet. And more sub-Saharan depositary receipts are sure to hit foreign markets soon. By my count, 24 new ADRs listed on US markets within the past two years.
Here’s a list of those currently available with average daily trade volume greater than $10,000.
African ADRs and GDRs
|Anglo American Platinum (AGPPY)||South Africa||Mining|
|AngloGold Ashanti (AU)||South Africa||Mining|
|Aspen Pharmacare (APNHY)||South Africa||Pharmaceuticals|
|Barclays Africa Group (AGRPY)||South Africa||Banking|
|Barloworld (BRRAY)||South Africa||Industrial|
|Bidvest (BDVSY)||South Africa||Industrial|
|Clicks Group (CLCGY)||South Africa||Retail|
|DRDGold (DRD)||South Africa||Mining|
|Exxaro Resources (EXXAY)||South Africa||Mining|
|Gold Fields (GFI)||South Africa||Mining|
|Guaranty Trust Bank (London: GRTB)||Nigeria||Banking|
|Harmony Gold Mining (HMY)||South Africa||Mining|
|Impala Platinum (IMPUY)||South Africa||Mining|
|Imperial Holdings (IHLDY)||South Africa||Industrial|
|Kumba Iron Ore (KIROY)||South Africa||Mining|
|Massmart Holdings (MMRTY)||South Africa||Retail|
|Mediclinic International (MCFFY)||South Africa||Healthcare|
|MiX Telematics (MIXT)||South Africa||Technology|
|Mr Price Group (MRPLY)||South Africa||Retail|
|MTN Group (MTNOY)||South Africa||Telecom|
|Murray & Roberts (MURZY)||South Africa||Construction|
|Nampak (NPKLY)||South Africa||Packaging|
|Naspers (NPSNY)||South Africa||Media|
|Nedbank (NDBKY)||South Africa||Banking|
|PPC (PPCYY)||South Africa||Cement|
|Sanlam (SLLDY)||South Africa||Insurance|
|Sappi (SPPJY)||South Africa||Paper|
|Sasol (SSL)||South Africa||Energy|
|Shoprite (SRGHY)||South Africa||Retail|
|Sibanye Gold (SBGL)||South Africa||Mining|
|Standard Bank Group (SGBLY)||South Africa||Banking|
|Telkom (TLKGY)||South Africa||Telecom|
|Tiger Brands (TBLMY)||South Africa||Packaged Food|
|Vodacom (VDMCY)||South Africa||Telecom|
|Woolworths (WLWHY)||South Africa||Retail|
|Zambeef Products (London: ZAM)||Zambia||Food|
It’s Your Turn
Have I missed any African ADRs or GDRs? If so, let me know in the comments!