Blogs & Comment

The final frontier

Are Nigeria and Lebanon the new China and India?

If you’ve ever wished you had invested in China 30 years ago, when it was still an underdeveloped country, you might want to consider putting your money in the world’s “frontier” markets.

Frontier markets are countries such as Lebanon, Estonia, Nigeria and other places in Africa, the Middle East and Eastern Europe that are just now starting to experience economic growth. These countries still have a long way to go before any of them become the next China – if they ever will – but thanks to a Franklin Templeton’s new Frontier Markets fund, you can take a chance and buy into these nations now.

The fund, led by Mark Mobius, the company’s top emerging market manager, says the fund is for people who want “To capitalize on a changing world.” He explains that his team will look at countries similar to what China or India were like two decades ago and points out that between 2001 and 2010, nine of the 10 fastest-growing economies in the world were frontier markets such as Kazakhstan, Nigeria and Mozambique.

Frontier markets, says the company, has lower volatility because there’s less correlation between many of these countries as they have very different economies. However, many of these locales are also rife with political problems, foreign investment is still in its infancy and there’s a good chance a number of these places won’t grow the way China has.

Still, Mobius says as developed countries mature, people need to start looking elsewhere for growth.  “In an era of mature growth in developing countries, Canadians need to look to new frontiers for investment opportunity,” Mobius said. “Step one is understanding which markets will rise, and step two is getting in on the ground floor.”