The world seems to be getting smaller. Investors are having the time of their lives: accessing the highly volatile markets and making double digit returns within less than a month, what one would expect over as a handsome reward over a period of five years from global market leaders. Morgan Stanley, it recently emerged, mopped up most shares of the Safaricom IPO in Kenya despite the fact the market was perceived as not ready for investors following the post election violence. Morgan Stanley was just one of the many foreign investors who are keen on frontier markets.
With the passing of global giants like the
One would describe such countries as being too young and untested to be described as emerging. However, most of them are on a growth path and will soon join the emerging peers.However, only the risk takers stand to benefit from their volatility and the reward pegged to them.
Frontier markets are known for their high illiquidity. Most of the markets record very low transaction volumes. With the exception of
In addition to this, they are very small with only a few company listings.
In addition, most frontier markets are very risky to invest in. Take
Frontier markets present an economically viable untapped potential with long term benefits. What is even more exciting about them is that the whims, emotions and prejudices of the local investment community mainly determine how badly or well the market performs.