Frontier markets are typically characterized by reform processes, high economic growth and young populations.
Mid-cap stocks exposed to structural change, ‘picks and shovels stocks’ and undervalued frontier market businesses are three areas of investment that would likely slip below the radar of the more passive and large-cap focused emerging market investor. For active, fundamentals-driven investors like us, they represent a great opportunity.
Faced with negative interest rates on deposits and government bonds, as well as very low yields on credit instruments, investors are pushing further into risk assets. Within equity markets ‘bond proxies’ are trading at elevated levels of valuations as investors chase ‘safe’ earnings and dividends.