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Frontier Markets Group 1

Asha Andrews Pavin Thomas Reja Abraham Jelix Thomas Tobin Abraham Hassan Moosa

Background Information
What is a frontier market? a market that is neither developed nor an emerging market that is open to foreign investors

Why are investors so interested in frontier markets? these countries are in the early stages of their economic development so their GDP rates tend to be higher than non-frontier market countries

Objectives
Differentiate

frontier markets from other types of

markets
Which

countries/regions are considered frontier markets? why frontier markets are worth investing in risks in investing in frontier markets

Prove

Consider

Market Tiers

Developed: most developed, and have high highly developed capital markets

United States, Canada, Germany, UK, Australia, New Zealand, Japan

Emerging: country in the process of rapid growth and development with lower per capita income and less mature capital markets than developed countries

BRIC: Brazil, Russia, India, China PIIGS: Portugal, Ireland, Italy, Greece, Spain

Frontier: One with little market liquidity and lower per capita income

Nigeria, Kenya, Ghana, Jamaica, Sri Lanka, United Arab Emirates, Iran, etc.
(McFarland 60, 65)

Frontier Markets by Region

("MSCI Frontier Markets Indices.)

Charts

("MSCI Frontier Markets Index Leaves Emerging Markets In the Dust.)

("Frontier Markets Remain Long Term Opportunities.)

(Brown, Joshua M.)

Alternatives

Recommendations

If you choose to invest in frontier markets, choose to invest in markets that are geographically and politically close to emerging markets.

Ease of trade Friendly political relations

Do your research on the governments and populations of these countries

Political stability Economic stability (currency, debt, capital spending/investing)

Demographics

The safest investment is obviously in developed markets, and then in emerging markets.

By investing in already developed markets, you lose potential high returns in frontier markets.

Conclusion

Potential high rates of return from frontier marketing companies (Increase in assets or interest).

These markets have a capital-deficiency, leads to higher return on capital (How much cash flow generates from an investment).

Amount of primary products available in these countries (making use of its natural

resources).

Frontier markets sell at a significantly low amount compared to developing/emerging countries.

There are always risks involved whether you invest in any market. Invest wisely!

Works Referenced

Brown, Joshua M. "What Are The Frontier Markets?" Thereformedbroker.com. The Reformed Broker, n.d. Web. 21 Jan. 2013. "Frontier Markets Remain Long Term Opportunities." Emergingmarketscapital.net. Emerging Markets Capital, n.d. Web. 21 Jan. 2013. McFarland, Mark. "Frontier Markets Remain Long Term Opportunities." Emerging Markets Capital RSS2. CPI Financial, July 2012. Web. 23 Jan. 2013. "MSCI Frontier Markets Index Leaves Emerging Markets In the Dust." Seekingalpha.com. Seeking Alpha, n.d. Web. 20 Jan. 2013. "MSCI Frontier Markets Indices." Msci.com. MSCI, n.d. Web. 22 Jan. 2013.