The empty shells of once grand hotels loom over the dusty street of this once prosperous town…
From the old railway yards a line runs deep into the heart of the Mozambican countryside and ends…nowhere really…it was blown-up by landmines during the country’s bitter civil war.
The last train rolled out of here a quarter of a century ago…
Under the tin-roofed bars along the waterfront, former Marxist rebels lounge with bored prostitutes drinking Laurentina beer.
Neither of them have much to do these days. The crowds of holiday-makers and businessmen who once thronged this port have vanished.
But the civil war that drove them away ended in 1992. And this forgotten port in Mozambique is set for a massive boom
Welcome to Beira – the hottest property play in Africa.
International agencies are investing millions in the city
It doesn’t really sound like the sort of place where fortunes are going to be made, but Beira is about to become the hottest property investment in Africa.
The name Beira may ring a bell if you are a regular reader of The Right Side. I wrote about “the boomtown on the edge of the world” back in February. And I showed you exactly why this is such fantastic investment opportunity. You see, Beira lies on the east coast of Mozambique. And it was once one of the great ports of Africa. This was the main trading hub for much of southern Africa. But all that was a long time ago...
First the port was devastated by Mozambique’s civil war that raged on from 1977 to 1992. And then just as things began to look up, neighbouring Zimbabwe plunged into its own economic and political crisis. That was a devastating blow to Beira. Landlocked Zimbabwe was the regional economic powerhouse. And most of its international trade flowed through Beira. That has completely collapsed. And the world has practically forgotten about Beira.
But I’ve been keeping a very close eye on what goes on in this dusty little port. And a lot has happened in this town since I last wrote about it in February. Because, just as I expected, huge amounts of money have started to flow into Beira.
The World Bank has poured $104 million into reviving the port. The Dutch and Danish governments have pumped in another $13 million as well.
And right at the start of this month, the European Investment bank announced that it will loan the Mozambique government €65 million euro to revive Beira. 42 million euros of that will be spent on dredging the port to allow massive 60,000 tonne ships to come in. The other 23 million will be used to revive that shattered railway line.
The money is starting to flow. And the construction work is set to kick-off. Beira is a boomtown waiting to happen. In fact, it’s probably the hottest property investment in Africa right now.
This boom will last for decades
You see, these big international agencies aren’t just putting money into Beira out of the goodness of their hearts though. They’re doing it because there’s a massive amount of money to be made here.
You see, the Beira Railway line runs to the colossal Moatize coal mines deep in western Mozambique. This is probably the biggest untapped coal reserve in the Southern Hemisphere.
The Moatize coal mines are now being developed by the Brazilian mining giant Vale. And they are going to ship all that coal out through the port of Beira. They need to bring this huge energy reserve onto the global markets. That’s why they’re pouring hundreds of millions into reviving this silted-up port and bombed-out railway.
And love it or hate it, coal is here to stay. In fact, the International Energy Agency says that it will be the fastest growing source of energy globally over the next two decades. These giant coal reserves will be flowing through Beira for decades to come. Beira is set for a long-term boom.
And then there is Zimbabwe. Since I last wrote about Beira, the country has put together a functioning government. And it has put an end to the hyperinflation that destroyed its economy. Zimbabwe is in the early stages of an economic recovery. As its economy picks-up, Beira will resume its role as the main trading post for land-locked Zimbabwe as well. So there is a lot more to this story than coal from Moatize.
Here’s an off-beat way you could profit from the Beira Boom
This is one of the big investment opportunities that looks set to pay-off even while the global economy is stick in recession. And I have found the perfect way to buy into the Beira Boom. This AIM-listed company took control of a big chunk of prime waterfront property in the centre of Beira last year. And it has plans to revive those bombed-out hotels and develop business and industrial parks in the port.
It sounds like a whacky idea. But I believe that they’re just the people to pull it off. You see, they’ve done something just like that on the other side of Africa over the last three years. You can download a report with more details on this off-beat investment opportunity here.
Good investing,
Manraaj Singh
For The Right Side
P.S. Just to let you know, there will be no issue of The Right Side on Monday. Enjoy your Bank Holiday weekend.
Editor’s note: Manraaj Singh is the Chief Investment Strategist of Profit Hunter, an investment service focused on unique profit opportunities from around the world that are overlooked by mainstream analysts. Click here to join him.
MARKET NOTES
Pound bounces despite triple-A downgrade warning
BY THEO CASEY
Well, that wasn’t supposed to happen...
Yesterday, S&P, the ratings agency, summoned the confidence to speak out and say what the CDS markets have been telling us for a year, that the UK could lose its triple-A status. It lowered its outlook on Britain to "negative" from "stable" and conceded that the country faces a one in three chance of a ratings cut as debt approaches 100% of GDP.
That took the market by surprise and the pound dropped like a boxer caught by a sucker punch. Much to my surprise, it picked itself up off the canvas to win the fight. The chart below shows the exchange rate of the pound in dollars. Despite falling yesterday (black circle) on the S&P announcement, it has since recovered. As at noon today, the pound was trading 25 pips above the pre-announcement level!
Stiff upper lip - the British pound recovers despite new credit downgrade fears
Source: The BBC
Now, the announcement that the UK faces a potential downgrade does not surprise me. I have been warning of such a downgrade since 16 March this year and have been bearish on sterling since August last year. Nations with gross debt over 100% of GDP deserve to be downgraded. Indeed in 1995, Japan was stripped of its triple-A rating when it crossed the 100% threshold as did Canada when it crossed 100% in 1998.
What does surprise me however, is the market’s nonchalant response to a serious warning. After initially dipping, the pound has fully recovered. The consensus among the bulls seems to be that the pound is regaining lost ground having fallen so far in the last 12 months. That isn’t a good enough reason...
If we look at the key fundamentals of the currency markets - interest rates and relative value - neither are bullish for the pound. So the pound has no business in rising. It seems that currency traders are buying the same "green shoot" hype that the stock markets are. Against S&P’s warning, such optimism seems dangerously misplaced.
What we told the chiefs of “Bubble World”
BY BILL BONNER
Washington, DC
Friday, 22 May 2009
Yesterday...we ventured into “Bubble World.”
“What’s going on? When will this be over? How bad do you think it will get? What can we do to turn this around?”
Members of Congress have the same questions the rest of us have. They read the same claptrap in the newspapers. They hear the same balderdash explanations from economists and federal officials. They’re wondering what is really going on.
Not that we know. But they asked us anyway.
We report to you today from the banks of the Potomac. Our old friend, Congressman Ron Paul, organized an off-the-record discussion with several other members of Congress. The subject was the financial meltdown...and the bailout. We were there to talk, of course, but we were more interested in listening.
“You don’t understand,” said a Senate functionary we met later, “these people live in Bubble World. They’re protected from the real world by their staffs and by the system itself. You imagine that they would know what is going on. But they don’t. They know less than we do. And they’ll be the last to find out. They are so busy meeting constituents...dealing with donors...working out deals with their political parties and supporters...and feeling like big shots...they don’t really have any time to study the issues. So they count on staff and party committees to tell them what to say, how to vote...and what to think.”
Waiting in the corridor of the Cannon building, two men in grey suits walked by...we overheard this conversation…
Read on...
To read the Daily Reckoning in full, click here
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