It may sound illogical for mutual fund portfolio managers to pour millions of dollars into a nation with an inflation rate of 8,000% and a food shortage, but that is exactly what is happening in Zimbabwe, where foreign direct investment totaled $103 million in 2005, up remarkably from $4 million two years earlier, The Wall Street Journal reports.
Attracted to oil fields and gold mines throughout Africa, investors are also putting money in Lagos, Nigeria and Johannesburg. Botswana is also attracting interest, due to its diamond mines, as well as Uganda, rich in agriculture.
Fund managers said they are optimistic about Zimbabwe’s future because they believe the situation can’t get any worse and President Robert Mugabe, who has ruled Zimbabwe for the past 10 years, will soon step down. They also say that returns in emerging markets, while still strong, have recently been declining.
The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.