NEW YORK (TheStreet) -- There's lots of talk about asset bubbles and oversaturation in emerging markets like Brazil, India and China, so investors looking to diversify their portfolios may want to investigate frontier markets instead.
According to the International Monetary Fund, 17 of the 20 fastest expanding economies fall into the frontier market category, which refers to developing markets at a much earlier stage of economic and financial development than emerging markets.
Examples include Qatar, Uzbekistan, Pakistan, Vietnam, Argentina, Chile, Ghana and Angola.
These markets are attractive partly because their lack of access to Western financial markets shielded them from the global credit crisis.They also are developing rapidly, which generally translates into higher earnings potential for domestic companies and investors. Frontier markets also offer investors the opportunity to diversify their portfolios, because these markets have growth dynamics that often do not correlate with the economies of developing nations. Additionally, growth in China and India is likely to trickle down and have a domino effect in some these frontier nations. This trend is already starting to emerge as many of these countries are witnessing an expansion of their middle class, which is increasing spending power and consumer consumption. Lastly, some observers suggest that some of these markets are undervalued because they are rich in natural resources and commodities while enjoying low labor costs. In fact, Ghana is the world's second largest cocoa producer, Angola is the largest crude oil producer in Africa, Qatar has an ample supply of crude oil and natural gas and Chile is known for its copper production.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV