Frontier markets slumped in line with other non-dollar denominated markets in 2018; though outside of Argentina (which fell by -50%), frontier markets as a whole outperformed even the U.S.. Almost all of the positive contribution in 2018 came from dollar-pegged Kuwait, which surged early and late in 2018 to buck global trends and gain 15% on the year. Broadly, valuations remain in line with emerging markets, albeit at higher returns on equity. Broad prospects for the beta in frontier markets remain mixed, but with good stock-picking opportunities amid increasing neglect. For our macro calls, we are strategically bullish only in Vietnam, where macroeconomic stability and high growth continue unabated. In 2019 we are also looking for some tactical outperformance from Nigeria. In Argentina, we will stay neutral until after the elections in October. Our underweights are all in MENA, where valuations and growth remain generally uncompelling despite our relatively constructive view on oil prices for 2019. READ MORE
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