Frontier markets, hub for global investors: Survey

Mumbai, Apr 17: You can call them the trend setters in the fast changing economical world. Once ruled out by the global investors as being a mere unnecessary ingredient in the recipe for high portfolio returns - frontier markets are no longer the same old 'illiquid' platforms in the years ahead.

According to a recent survey conducted by American credit rating agency Standard and Poor's(S&P), the cluster has joined the elite club of 'stronger &xD;performers' like India and China, after achieving an annual growth of over 36 per cent in last five years, moving even ahead of many other emerging markets like China, Korea, Mexico and in terms of the growth momentum.

Frontier markets, defined so by their relatively small deals and illiquidity, have attracted those investors eyeing higher returns in recent past, says the study.

The S&P frontier index comprise 22 countries that include Bangladesh, &xD;Cote'D'Ivoire, Ecuador, Estonia, Kenya, Latvia, Lithuania, Slovak Republic, Romania, Bulgaria, Kenya, Ukraine and Mauritius, with all of them were either underdeveloped or developing economies but have always been in a struggling mood to emerge as strong economical hubs.

According to the report, these markets are growing with a fast pace providing higher portfolio returns for the international investors wooing them to their laps.

The report-titled as 'Equity Insight: Why Emerging Markets are Becoming a Key Ingredient in the Recipe for High Portfolio Returns', also indicates the rapid growth gained by these markets in the past successive years was either due to higher commodity prices and by renewed structural reforms.

Among these smaller markets the Vietnam market has grown 128 percent in last year and has already gained a 60 per cent growth in the first two months of this year, says the study.

In a similar away, other markets outside the 'mainstream' emerging markets - which are excluded from emerging market index series because of smaller size, lower liquidity or limited access - have also been providing attractive returns, says the report.

''With the commendable gains from these markets, emerging market stock investments are learned to have become a must-have for major investment portfolios, though at times, attention of investors often deviates up on larger economies like Brazil, Russia, India and China'', says an S&P official.

UNI