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Background Information
What is a frontier market? a market that is neither developed nor an emerging market that is open to foreign investors
Why are investors so interested in frontier markets? these countries are in the early stages of their economic development so their GDP rates tend to be higher than non-frontier market countries
Objectives
Differentiate
markets
Which
countries/regions are considered frontier markets? why frontier markets are worth investing in risks in investing in frontier markets
Prove
Consider
Market Tiers
Developed: most developed, and have high highly developed capital markets
Emerging: country in the process of rapid growth and development with lower per capita income and less mature capital markets than developed countries
BRIC: Brazil, Russia, India, China PIIGS: Portugal, Ireland, Italy, Greece, Spain
Frontier: One with little market liquidity and lower per capita income
Nigeria, Kenya, Ghana, Jamaica, Sri Lanka, United Arab Emirates, Iran, etc.
(McFarland 60, 65)
Charts
Alternatives
Recommendations
If you choose to invest in frontier markets, choose to invest in markets that are geographically and politically close to emerging markets.
Demographics
The safest investment is obviously in developed markets, and then in emerging markets.
By investing in already developed markets, you lose potential high returns in frontier markets.
Conclusion
Potential high rates of return from frontier marketing companies (Increase in assets or interest).
These markets have a capital-deficiency, leads to higher return on capital (How much cash flow generates from an investment).
Amount of primary products available in these countries (making use of its natural
resources).
There are always risks involved whether you invest in any market. Invest wisely!
Works Referenced
Brown, Joshua M. "What Are The Frontier Markets?" Thereformedbroker.com. The Reformed Broker, n.d. Web. 21 Jan. 2013. "Frontier Markets Remain Long Term Opportunities." Emergingmarketscapital.net. Emerging Markets Capital, n.d. Web. 21 Jan. 2013. McFarland, Mark. "Frontier Markets Remain Long Term Opportunities." Emerging Markets Capital RSS2. CPI Financial, July 2012. Web. 23 Jan. 2013. "MSCI Frontier Markets Index Leaves Emerging Markets In the Dust." Seekingalpha.com. Seeking Alpha, n.d. Web. 20 Jan. 2013. "MSCI Frontier Markets Indices." Msci.com. MSCI, n.d. Web. 22 Jan. 2013.