What Are Frontier Markets?

What Are Frontier Markets?

Investments are just some of the matters in this world that ought to be taken extra seriously. Having said that, careful consideration is something that has to be made before they decide in doing so. While the instincts of investors would usually lead them to make business and do investments in places where the markets are already thriving, some sites, such are  InvestAsian.com lead them to do otherwise, and instead, do investments in Frontier Markets, or in developing countries. What are these frontier markets? This article aims to shed light on this particular topic.

Basic Definition

Frontier Markets refer to countries that are developing in nature, but are more developed than those countries categorized as the least developing. Despite this, their economy is not yet that progressive for them to be classified as an emerging market. The history of this term could be traced back to Farida Khambata of the International Finance Corporation in 1992.

What makes a Country a Frontier Market?

This particular term usually refers to countries which are small in terms of equity markets, but is still a good place to make investments in. Low correlations with other markets, as well as long and high-run potential are both are what makes these investors want to invest in the country. This could also be referred to the step before being an emerging market, wherein some countries have regressed themselves in.

What are the known Frontier Markets?

Asia is a place known for having a lot of these kinds of markets. This is because a lot of the developing countries, as categorized by western standards are situated here. One of the most popular frontier markets in the whole of Asia is Burma, which has just recently shifted from a military form of government to one which is democratic in nature.