Frontier

Get ahead of emerging markets with top-performer picks for up-and-comers

Frontier helps investors successfully navigate markets that are yet to “emerge,” with expert advice on spotting opportunities and minimising risks. With first-hand insights into frontier markets as we travel with big-name fund managers from Mark Mobius to Morgan Stanley, this practical guide ranks countries, stocks and bonds on a five- to ten-year horizon to steer investors toward the most promising destinations. Written in a compelling and accessible travelogue narrative, each chapter covers a specific country, providing invaluable market analysis and a deep understanding of the political, economic, and social background of those most likely to outperform. The key focus is on fresh ideas, based on the assessments from top performing money managers when meeting challenges, hostilities or adversity, and observations after interviewing high-level government officials and executives.

With advanced economies shackled by debt and sluggish growth, investors are increasingly turning to emerging markets for better returns. Yet the money managers who came out on top in China, India, and Brazil are now focusing their attention on markets that have not yet emerged. This book applies the perspective of ten of the most successful fund managers in their field, providing an unparalleled guide to assessing investment potential in places better known for conflict, poverty and corruption.

· Discover which markets have the best prospects, and which are potential disasters

· Analyse individual markets by metrics including macro data, global relative value comparisons of stocks and bonds, buy/ sell triggers, and more

· Learn which industries, stocks and bonds should be considered in each market

· Examine each country through real-life on-the-ground assessment of corruption, conflict and other risks as well as inspirational breakthroughs that signal opportunities

This is a practical manual for all investors - whether students or professionals - wanting to get to know the most promising new markets while avoiding the pitfalls. A must-read for corporate executives seeking global capital, Frontier provides a better understanding of the changing international investment dynamic.

Robin Wigglesworth, FT:

“Invaluable.”

Mark Mobius, Templeton:

“I love it! Beautiful descriptive writing.”

Aliko Dangote, Wealthiest African:

“Captivating tales, masterly woven.”

About the Author xi

Disclaimer xiii

Prologue xv

Introduction to Frontier by Mark Mobius 1

CHAPTER 1 Kenya 11

I Mamboz 12

II Can’t Believe You’re Going to Kenya 17

III Sleeping Serpent 19

IV Prowling Leopard 29

V Clinker 39

CHAPTER 2 Myanmar 45

I Halcyon Days 46

II Uncle 50

III Yoma 55

IV Son 61

V Gaung Baung 66

VI Monk of Mandalay 73

CHAPTER 3 Romania 79

I Ro-man-ee-a! 80

II Systematization 85

III Brown Envelopes 90

IV Mega Mall 94

V Drac-ul-a 99

VI Crossroads 106

CHAPTER 4 Argentina 111

I Arbolitos 112

II Del Fin Del Mundo 118

III Vaca Muerta 126

IV Adelante 133

CHAPTER 5 Vietnam 137

I Confucius 138

II Aristotle 144

III Panacea 152

IV Equitization 159

V Automata 164

VI From Noodles 167

CHAPTER 6 Nigeria 169

I Eko Beach 170

II Crude Politics 178

II Sugar King 192

CHAPTER 7 Egypt 199

I Revolution II 200

II Cleopatra 204

III Sahl Hasheesh 211

IV Audacity of Hope 214

V Zahma! 223

CHAPTER 8 Saudi Arabia 229

I Virtue and Vice 230

II Socialist Monarchy 239

III Desert Farming 244

IV Opening Bell 248

V White Balloons 252

CHAPTER 9 Sri Lanka 255

I Family Economy 256

II China City 262

III Pawn 267

IV Kilinochchi 274

V Rising Sun 287

CHAPTER 10 Ghana 291

I Goatanomics 292

II Highlife and Death 299

III Gold Diggers 304

IV Cassava King 310

V Egg and Stone 312

Conclusion – Journey’s End 317

Acknowledgments 385

Index 389

“..as a book on emerging markets, Serkin certainly set the standard with ‘Frontier’….a must read for investors wanting to find out how valuation in emerging markets really works” (Financial Times, March 2015)

GAVIN SERKIN is the Emerging Markets Editor-at-Large, working with reporters and editors worldwide. He joined Bloomberg in 2000 as Europe’s investing reporter, before specializing in emerging markets in 2001. Serkin was previously the Editor of Portfolio International and the News Editor for a group of nine weekly newspapers in London and Southeast England.

In a quest for the most profitable investment opportunities, Gavin Serkin journeyed deep into the world of emerging markets. What he found – traveling alongside money managers who achieved some of the best fund returns globally in their categories for the past five or ten years –was an exotic collection of countries and markets that went beyond the concept of “emerging and into a realm most investors don’t typically consider, namely frontier markets.

Think Myanmar, Ghana, Sri Lanka, Nigeria or Romania, to name a few – countries frequently associated with conflict or poverty or other seemingly impenetrable barriers to investment. These destinations, characterized by smaller market capitalization and liquidity, have nevertheless achieved impressive returns in the past several years. But how to invest in them safely is the challenge.

In this compelling travelogue, Frontier: Exploring the Top Ten Emerging Markets of Tomorrow takes the reader on a vivid journey from the poorest of slums to the glass towers of billionaires as Serkin encounters corruption, police brutality and state-sponsored violence first hand – as well as some inspirational breakthroughs. Traveling from democracy to communist to Islamic regimes, from Africa to Asia to eastern Europe, the Middle East and Latin America, he puts top money managers face-to-face with government ministers and central bankers and calls corporate executives to account - all the while putting boots on the ground to convey a reporter’s and experienced traveler’s sense of place and purpose.

The result is an exhilarating yet practical guide for investors in how to spot opportunities, avoid pitfalls and minimize risk in some of the world’s most dangerous places – an invaluable opportunity to learn volatility assessment and valuation techniques from some of the biggest-name fund managers, including Templeton’s Mark Mobius and frontier market experts from Morgan Stanley, Deutsche Asset & Wealth Management, Aberdeen Asset Management, and several more.

Their advice: don’t limit yourself to spreadsheets. Do your research in person. When you land, keep your eyes open, Mark Mobius cautions. How crowded are the restaurants? How efficient is the public transportation? How modern is the airport? Along with financial considerations, these everyday things can convey a lot.

The book includes solid data readers can readily apply: the investors provide rankings of their top frontier countries, stocks and bonds on a 10-year horizon, analysis of the opportunities and risks, and triggers to watch that might signal whether to buy or sell.

Frontier is a must-read for professional money managers on the look out for promising new markets, those already active in emerging markets who seek more information, or everyday investors wanting to understand their own pension or estate choices better.