Investor-led and casual trading has been on the rise for several years across the world, but now it is really picking up in Africa and its 54 countries. Different types of trading are gaining ground in different ways, and of course, there are differences between countries. Here are just a couple of popular investment options for African investors.
Forex is the trading of foreign exchange currencies and it has seen a surge in popularity in Africa. Over the last two years, amid volatile currency rates across the world, many lay people have looked to the forex market as a way to get involved in trading. Forbes noted that increased access to the internet and smartphones amongst citizens also helping the sector boom.
They estimated that in 2020, forex trading grew by around 200% throughout the year. The majority of this interest came through online trading and brokerage platforms, providing traders with an accessible way to get involved. A wealth of free information is available for traders online to help them get to grips with how the markets work.
Index trading is where groups of stocks that are put together into an index are traded like any other commodity would be. For example, a trader may like to invest purely in tech stocks, manufacturing stocks, or groups of certain commodities like metals or cereals. These assets would then be grouped into an index which is then traded by the investor. Indexes can also be formed based on region and value. Popular examples include FTSE100, DAX and IBEX 35, although there are many, many more.
This kind of trading is gaining ground across the world as it allows traders to more broadly speculate on assets that interest them. Also, it is less volatile than some other forms of trading, as you are trading on the value of an entire group of assets, rather than just one. On an African level, there are various indices, such as the Kenya NSE 20, the Nigerian NSE 30 and NSE All-Share, and many more.