Should You Invest in Frontier Markets?
Money For the Rest of Us
J. David Stein
4.5 • 1.4K Ratings
🗓️ 23 June 2021
⏱️ 30 minutes
🔗️ Recording | iTunes | RSS
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Summary
What are the risks and opportunities of investing in frontier equity markets?
Topics covered include:
- What are the criteria used to determine whether a country's stock market is considered a frontier, emerging, or developed market
- Why some countries aren't included in any MSCI stock index
- How large are frontier markets in terms of population, economic output, and equity markets
- How frontier market's favorable demographic profile make them attractive, but might not lead to higher investment returns
- What are the risks of investing in frontier markets
- How expensive or cheap are frontier markets
- What have been frontier market's historical returns, volatility, and maximum drawdowns
- What are ways to invest in frontier markets
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Show Notes
MSCI 2020 Market Classification Review
Kuwait’s Move from Frontier to Emerging Market—MSCI
Frontier markets Longer Term Investments (LTI) by Corinne de Boursetty—UBS (PDF download)
Frontier Markets: A Comparative Analysis by Cliff Quisenberry—Investment & Wealth Institute
Why globalists and frontier-market investors love Vietnam—The Economist
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341: How to Overcome Investing Fears
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Transcript
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| 0:00.0 | Welcome to Money for the Rest of Us. This is a personal financial on money. How it |
| 0:05.3 | works, how to invest it, and how to live without worrying about it. I'm your host |
| 0:10.2 | David Stein today as episode 347. It's titled, Should You Invest in Frontier |
| 0:16.7 | Markets? This week MSCI, a leading provider of indexes and analytics is |
| 0:25.2 | issuing their annual classification review report. In this report, MSCI |
| 0:32.7 | classifies a particular country stock market, ranks it, whether it's a |
| 0:38.5 | developed market, an emerging market, a frontier market, or a standalone market. |
| 0:45.7 | And those classifications then are used to determine what index the particular |
| 0:51.7 | country or market is in. And we'll look at the differences between those broad |
| 0:56.8 | categories. But this is a big deal for countries because if they move up to a |
| 1:02.4 | developed market or from frontier to emerging markets, that can attract |
| 1:07.5 | additional investment and capital flows into the country. Conversely, there's |
| 1:13.4 | the potential to be downgraded to a lower tier market. MSCI analyzes over 80 |
| 1:21.7 | markets. 23 are considered developed and comprise the MSCI world index. There |
| 1:28.9 | are 27 emerging markets that make up the MSCI emerging markets index and |
| 1:33.8 | combine the 23 developed countries and the 27 emerging markets countries make up |
| 1:39.2 | the MSCI all-country world index. Except that index that actually doesn't |
| 1:44.6 | actually include all countries. There are 27 frontier markets and 11 standalone |
| 1:51.6 | markets, which don't even meet the criteria for inclusion in the frontier |
| 1:56.6 | market index. The standalone markets include Jamaica, Panama, Trinidad, and |
| 2:02.2 | Tobago, Bosnia, Herzogovina, Bulgaria, Malta, Ukraine, Botswana, Zimbabwe, Lebanon, |
| 2:08.5 | and Palestine. They're not included in any index at all. MSCI's classification |
... |
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