Busting Frontier Market Investing Myths (Mobius Blog)
In a recent Mark Mobius blog post, Carlos Hardenberg, senior vice president and director of frontier markets strategies at Templeton Emerging Markets Group, outlined some of the opportunities he sees in frontier markets and he debunked some of the urban myths about such markets.
Hardenberg began by saying there are some very compelling reasons why investors might want to take another look at frontier markets. These can be summed up as the following:
- Expectations for robust economic growth
- Continued macro development
- Deep discounts in valuations
- Low correlations
As for urban myths about frontier market:
The most persistent are perceived illiquidity, small market capitalisation and poorer corporate governance standards.
Each of those accusations might be true if one looks just at a narrow selection of markets, but looking at the global opportunity of the frontier space, as we do, provides a better context in our view.
When it comes to concerns about corporate governance in frontier markets, we’d champion what we consider the positive influence of active management.
Looking back at the development of emerging markets in general over recent decades, the relationship between ownership and management has been an important one. We believe most of the positive change came because of the close collaboration between shareholders and the businesses, and the constant feedback both ways.
Hardenberg also says they estimate the total daily turnover traded on stock exchanges in frontier markets is US$2.1 billion every day while the market cap of frontier market companies is $1.7 trillion – a figure they expect to increase as new companies are constantly coming to market.
- Frontier Markets: Attractive Valuations with Limited Correlation (Mobius Blog)
- 8 of 10 Fastest Growing Markets are Frontier Markets (Mobius Blog)
- Mark Mobius’ Contrarian Case for Investing in Brazil (Mobius Blog)
- Argentina: Where Growth & Stock Market Returns Diverge (Mobius Blog)
- Corporate Governance in Emerging Markets: Progress and Opportunity (Franklin Templeton)
- Mark Mobius’s Favorite Emerging Markets: Indonesia, Russia, Brazil, Vietnam and South Africa (WSJ)
- Emerging Markets’ Foreign Exchange Reserves Have Dipped (Mobius Blog)
- Indices for Measuring Emerging Market Political Instability (Enterprising Investor)
- MSCI Islamic Total Return Index vs. MSCI Emerging Markets Total Return Index (Mobius Blog)
- Developments in the Reform of China’s State-Owned Enterprises (Mobius Blog)
- Unlike Emerging Markets, Frontier Markets Are a Less Volatile Haven (FT)
- Three Reasons Why Investors Should Buy Frontier Market Stocks (The BlackRock Blog)
- Templeton’s Chow: “No Reason the Goat and the Bull Cannot be Friends” (Mobius Blog)
- Lessons From When the USA was an Emerging Market (WSJ)
- Emerging Market Stocks Face Prospectus Scrutiny (Canadian Securities Law)