Far-flung Frontier Markets Lure More Investors
All of that has helped drive up Pakistan's stock market 11 percent this month. For the year, it's up 28 percent. By contrast, China's Shanghai Stock Exchange composite index has lost 10 percent this year, and Brazil's Bovespa has dropped 22 percent.
Still, a surging economy can often prove to be a dud of an investment, says Christian Deseglise, managing director at HSBC Global Asset Management.
Take China. Over the past five years, its economy has expanded by more than 10 percent on average. And over those same five years, China's stock market has lost 2 percent. Poorly-managed companies can still struggle to turn profits even as an improving economy sends them more customers.
"Some of these countries will have economies that do well but markets that do poorly, and vice versa," Deseglise says.That's the main reason investors say they avoid staking too much on a single frontier country. It's too easy to imagine something going wrong. So, investors often buy a little of all of them, spreading their bets over Africa, Europe and Asia.
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 + 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