Deep Dive: Frontier markets require caution due to 'barrage' of shocks

Divergence from emerging markets

Since the beginning of the year, frontier markets have underperformed the global index and while some experts who spoke to Investment Week said there may be some opportunities they advise caution, while others are outright avoiding the area.

The MSCI Frontier Markets index has lost 7.8% since the start of the year to 8 August, while the MSCI World All Cap has lost 3.5%, according to FE fundinfo. Performance aside, there are several fundamental reasons to be nervous about frontier markets this year. "To become optimistic about such economies we have to believe we are looking at a world where monetary policy will remain loose, geo-political disputes scarce and the inflationary environment benign," explained Charlie Parker, managing director at Albermarle Street Partners. It is safe to say that is not the current picture....