Hunting for Profits on the Wild Frontier
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While the FTSE tanks, we’re finding opportunities in unusual places.
The FTSE tanked by 2.6% on Monday. Predictably, the headlines are offering us more gloom and doom this morning. There are still good value investments out there though…and the further “out there” you go, the more interesting they seem to get.
Lately, I have been spending a lot of time looking at opportunities from the so-called “frontier markets” - the smaller, less-developed emerging markets. I’m talking about places like Nigeria, Pakistan, and Lebanon. Think of them as the emerging emerging markets.
There is actually a huge opportunity here. These markets cover almost one billion people and about $2.4 trillion in capital. A loose definition from the World Banks sums them up as high risk, low income countries that are difficult for outside investors to access; are fairly risky on the political and economic front and offer the potential for huge returns and huge declines.
You might already be familiar with the term “frontier markets”. It’s been bandied about in the financial press for a while.
In 2005, Goldman Sachs ( NYSE: GS) came up with a list of eleven smaller economies it believes will see the most exciting growth between now and 2050. It has dubbed them the N11 (Next 11). In alphabetical order, here they are: Bangladesh, Egypt, Indonesia, Iran, Korea, Mexico, Nigeria, Pakistan, Philippines, Turkey and Vietnam. That list gives you an idea of where the City is now looking for profits.
Investors Chronicle (or Chronic Investor, as my colleague, Frank Hemsley, has dubbed it) ran an article on them earlier this year, informing readers that “investing in frontier markets directly is almost impossible for private investors in the UK.”
They did mention a fund-of-funds that that gives exposure to a number of frontier markets, but that isn’t really what we’re interested in here at Profit Hunter. It’s too far removed from the real action in these markets. And this service is about getting you as close as we can to where the real profits are being made…
A 73% gain… while other markets tank!
One of the most interesting frontier market I’ve been looking at is Lebanon. The country’s BLOM share index is up by 73% in the last 12 months. Not too shabby when markets everywhere seem to be in meltdown. But international investors just don’t seem to be paying much attention to Lebanon.
In fact, the only time this country ever seems to make the news is when it’s being bombed by Israel, facing another Hezbollah-inspired crisis or there’s been a political assassination. None of which have caused its share market any major damage, by the way…
I’m now looking at a number of companies there - and I’ll be letting readers know the moment I’ve found an investment that makes the grade.
So is it really that hard to invest in these markets?
Accessing these exotic markets isn’t really as difficult as most people imagine. True, the number of UK retail brokers willing to trade directly on these markets is fairly limited..
But, as usual, we’ve found a way around this problem…
In fact, we’ve got exposure to two of the most exciting frontier markets in our portfolio right now - including the most exciting of the lot - Vietnam. And best of all, we done it while keeping our money right here in London. You can read all about this smashing opportunity and how to get into Vietnam without having to call up a broker in Hanoi.
Regards,
Manraaj Singh
Editor
Profit Hunter
Source: Hunting for Profits on the Wild Frontier
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