Frontier Markets Shine Bright Within the Emerging Market Universe
Oliver Bell, Portfolio Manager T.Rowe Price
Emerging markets have performed poorly in recent years with moderating economic growth and disappointing earnings. However, frontier markets have outperformed as investors have recognised that robust domestic economic growth can be translated into strong earnings growth at a company level. Frontier markets have outperformed global and regional emerging markets in three of the last five years. African and Middle Eastern markets have been the main drivers of this outperformance, while Asian and Latin American frontier markets have lagged. In fact, in economic terms Africa today is similar to the emerging markets of Asia and Latin America fifteen years ago (Figure 1).