Stock markets in less developed countries will have a “good year,” as low interest rates worldwide and rising commodity prices stimulate economic growth, assessed the American bank Citigroup on Thursday.
Kazakhstan, Nigeria, and Croatia are favorites among frontier stock markets, which could outperform their more liquid rivals, noted Citigroup’s equity strategist, Andrew Howell, as reported by Bloomberg News. Frontier markets, trading at a ratio of 13.1 times earnings per share (P/E), are not “stretched” compared to other emerging markets, where trading occurs at ratios greater than 20 times according to the P/E multiplier, wrote Howell.
The “MSCI Frontier Markets Index” rose seven percent last year, while new markets grew by 75 percent. Many frontier markets “remain 50 percent or more below the peak levels reached in 2007 and 2008,” noted Howell. The environment of prolonged low global interest rates certainly suggests another above-average period for these less liquid markets, emphasizes Howell. Estonia, Serbia, and Kenya, in his assessment, are also “attractive” markets. The frontier markets index (MSCI Frontier Markets Index) includes 25 countries, among which are nine from Eastern Europe and the former Soviet Union. Along with Croatia, there are Bulgaria, Estonia, Lithuania, Romania, and Slovenia – all members of the European Union, as well as Ukraine, Kazakhstan, and Serbia. (H)
