Friday, July 11, 2008

Frontier Markets

A new kind of market awaits the hype cycle and inflow of capital - the Frontier markets. Developed, developing, emerging, emerged... now Frontier!

The BRIC (Brazil, Russia, India, China) financial markets are now fluctuating with theUS markets and in some cases their peaks and valleys seem to have a larger spike and dip, respectively. Having seen the growth numbers of some of the BRIC countries, I have to confess I do find myself scratching my head because their is no reason for those markets to fluctuate like the US, perhaps some... but by no means go to the extremes. Here (2007 Report to Congress of the U.S.-China Economic and Security Review Commision) is an interesting read that may shed light on my head scratching.

In comparison, the Frontier markets such as Middle East (a few Gulf region nations and Israel), Africa (South Africa, Eqypt, Morocco) seem to be holding their own. I predict that soon the financial media outlets and the investment analysts will be touting the unprecedented growth to be had from the Frontier markets and we will see a mass exodus of funds from the BRIC equity markets and other retail investment vehicles.

I will restrain myself from giving specific examples, yet as proof I guide the reader to look at ETFs and Mutual Funds portfolios built of the Frontier countries mentioned above and compare to the DOW Industrial Ave. The strength will be obvious.

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