The MSCI Frontier Markets index outperformed the MSCI Emerging Markets index throughout 2013 and much of 2014; but since last October and as oil prices started to plummet, the former has fallen by 9.4% while the latter has risen by 3.7%.
Roberto Lampl, head of Latin American investments at Alquity Investment Management, was quoted by FT Adviser as saying that passive investors in frontier market ETFs will typically have 72% exposure to oil-dependent countries, such as Kuwait, Qatar, the United Arab Emirates and Nigeria. The remaining 28% is composed of mostly Asian and African countries, such as Laos, Myanmar, Cambodia, Vietnam, Bangladesh, Sri Lanka, Pakistan and Kenya.
“Countries such as Kuwait and Nigeria will suffer from falling oil prices as lower government expenditure, lower investment and, in some cases, depreciation in their home currency impact their economies.”
To read the whole article, Frontier universe to shine, go to the website of FT Adviser.
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