Guest post: frontier markets – more profitable, less volatile – beyondbrics - Blogs - FT.com

Guest post: frontier markets – more profitable, less volatile – beyondbrics - Blogs - FT.com:



"In the last months, some isolated events such as the suspension of the Nigerian Central Bank governor, Lamido Sanusi, and the outbreak of the Ukrainian conflict, have set the alarm bells ringing. Frontier markets could be a bubble about to explode.



Though, the reality in this diverse set of countries is far away from the forecasts of the doomsayers. In the case of Ukraine, whose weight in the MSCI FM – the frontier market index – is negligible (0.1%), the stress prompted by the Russian occupation has not shaken investor confidence. The PFTS Index, the benchmark index of the Ukrainian stock exchange, has gained a 36.3 per cent since the beginning of the year and a 39.1 per cent since May 2013.



In the case of the largest African economy, whose weight in the MSCI FM is close to 15 per cent, the story is pretty much the same. Despite Sanusi’s suspension, widespread corruption and some recent restrictive decisions by the Nigerian Central Bank, the Nigerian Stock Exchange All-Share Index (NSE ASI) – has risen by 11.7 per cent since May 2013, despite having fallen by 6.7 per cent this year."



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