STOCK MARKET RESULTS

PRESENTED BY: ABDUL QAYYUM

STOCK MARKET INDICES

S&P

Frontier Broad Market Index MSCI Emerging Markets Index S&P 500 Index MSCI EAFE Index

RETURNS December. 1995 December. 2010

S&P

Frontier Broad Market Index 292% MSCI Emerging Markets Index 263% MSCI EAFE Index 167% S&P 500 Index 108%

FRONTIER MARKET Vs OTHER MAJOR INDICES

KEY RESULTS
Low

volatility of frontier markets Higher recovery of emerging markets

FRONTIER REGIONS Vs S&P 500

KEY RESULTS
Decline

of Eastern European markets from high of 108 in October 2007 to a low of 26 (a decline of 76 percent) African markets declined the least Middle Eastern frontier markets have done the best of the frontier markets in 20092010 Asia has done best after the end of civil war in Sri Lanka.

INDEX CORRELATIONS WITH THE S&P 500

KEY RESULTS
Prior to Crisis, frontier markets fluctuated between 0.20 - 0.40 Spiked to 0.74 in October, 2008 By April 2011, Frontier market stocks declined to 0.29, Emerging Markets 0.65, EAFE 0.83

DIVERSIFICATION OF FRONTIER MARKETS

Kohlert

(2010) observed that the frontier markets lost their diversification advantage at a critical time Author believe that the frontier markets will continue to provide excellent diversification benefits in normal times Berger, Pukthuanthong, and Yang (2011) confirms that the frontier stock markets offer significant diversification

STANDARD DEVIATION
Individual

frontier markets can have high

annualized standard deviation of

volatility:
Romanias

32 percent Bangladesh 31 percent

However, A portfolio diversified across frontier markets can have a low volatility

STANDARD DEVIATIONS OF INDEX RETURNS