Frontier markets, which include the likes of Sri Lanka and Argentina, are potentially lucrative because they’re at a relatively early stage of their development.
However, the political and economic backdrops of these countries can also be unstable, which means investors need to prepare themselves for a rocky ride.
This means frontier markets won’t be for everyone, according to Juliet Schooling Latter, research director at Chelsea Financial Services. The positives, she suggested, include a low correlation to other asset classes, very good demographics and plenty of under-researched companies.
Which frontier areas are most exciting?
“We view opportunities in Sri Lanka as relatively overlooked and valuations are decidedly cheap despite there still being high-quality management in place,” Oliver Bell, Manager of the T.Rowe Frontier Markets Equity fund said.
Its location adds to its attractiveness and potential. “Recent infrastructure projects, including port developments, are likely leading to a construction boom and there are some good stocks in which to play this,” he added.
“Argentina and Pakistan (which has been reclassified to emerging market status) have been our biggest exposures because their structural developments have been conducive to business growth and investment,” he said.
(BT)
Leave your comments
Login to post a comment
Post comment as a guest