Frontier Investor: How to Prosper in the Next Emerging Markets

by Marko Dimitrijević, Timothy Mistele

Where are the next decade's greatest investment opportunities? In today's undiscovered emerging the frontier markets. These markets account for 71 of the world's 75 fastest-growing economies and 19% of the world's GDP--yet many investors largely ignore them. Fueled by access to technology and information, frontier markets are emerging even faster than their predecessors, making them an essential component of a globally diversified portfolio. 

Nobody understands frontier markets better than Marko Dimitrijević, and in  Frontier Investor, he shows through colorful case studies, compelling charts, and fascinating travel anecdotes that it is not only possible but prudent to invest in these unfamiliar and undervalued markets. Dimitrijević explains how frontier markets like Nigeria, Panama, and Bangladesh are poised to follow a path similar to countries like China, India and Russia that were considered exotic two decades ago. He then details a strategy for how and where to invest--directly or indirectly--to profit from frontier's growth. Dimitrijević covers the political and other risks of investing in these markets, the megatrends that promise exciting investment opportunities in the coming years, and the prospects for countries beyond the frontier such as Myanmar, Cuba, and even Iran.

Frontier Investor  opens up a whole new world, and world view, to the broad investing public.    

Genres: Finance, Economics, Business

272 pages, Hardcover

Published October 25, 2016

Reviews

[Z · Rating 3 out of 5]

Solid overview of an accomplished investor’s experiences, mostly told through case studies and real life stories. Focused primarily on public debt and equity markets. Almost no references to private investments in these highly illiquid markets. Book is a bit dry and overly technical at times, which takes away from readability without adding value. I would still recommend it to those seriously interested in emerging / frontier markets investing, but okay to skip otherwise.

[Jonathan Sheets · Rating 5 out of 5]

Good read even if you do not trade EM or Frontier Markets. A look into Marko's investment process, anecdotes on how he built his fund, and personal case studies of trades makes the book well worth your time and money.
• Frontier and EM markets are under-invested and under-researched and provide opportunity due to their global share of GDP 30% vs MSCI allworld weighting of 9% Frontier Markets have favorable tailwinds in
• Reasons Why he likes FM...Favorable Demographics, Growing Middle Class, Improving Corporate Governance, Improving Infrastructure, Increasing Rates of Urbanization, Better Financed CA Deficits, Portfolio Diversification, Technology increasing participation with larger economies, Frontier markets have not participated in multi-year bull run and are cheap comparatively (as of 2016) , allegedly says sharpe on Frontier Markets is better than domestic but I would need to back-test the data myself to believe it due to survivor ship bias in his investment process.
• He advocates ADR active management style over ETF and Passive Funds, due to changing ETF and Passive Fund weightings. Notes that he obviously likes the currency exposure when invests in local exchange listed equities
• Companies that copy proven existing business models in emerging markets can sell off with macro environment and provide a good entry (latin american Pricesmart and Costco)
• Large Global Companies have can have multiple local exchange subsidiaries, and can outperform parent company ( ex. Unilever and Unilever Indonesia)
• Made a killing in Tequila Crisis going outright long Brady Bonds collateralized with UST ZC . Another trade via long argentina @ 42, sell coupon strip at 21, leaving 21 sovereign risk which comps for past debt episodes were 20s for ex-Soviet and Algerian Debt and Teens for Ivory Coast, Nicaragua, Yugoslavia, and North Korea
• SOTP valuation leads to opportunity regarding multi-country bond issues like in 1995 six Yugoslav republic's New Financing Agreement. Bosnian war rocked the bonds, weighing down the good apples of Slovenia and Croatia not affected by the war. Those 2 countries paid more in restructuring to get out, and access financial markets again.
• When FM is frothy find good Corporate bonds vs Short The Expensive Equity
• When governments move to a privitization of SEOs , you can buy up shares of the company from the citizens and then form an activist approach to lobby companies to buyback shares. I.E. Poland NIFs in 1995
• Risks for FM: Political Risk (ex. Russia, Chavez), Commodity Inflation Risk, Food Inflation Risk leads to Political Risk, Liquidity Risk of Getting Money Out, Systematic Risk from developed countries (08), Headline Risk, Settlement and Custody Risk
• FM Megatrends: demographic related themes, staples/travel leisure/ luxury retail / residential RE / healthcare / banking penetration
• New Natural Resources Opps: Onshore Oil Nigeria, Onshore Oil Kenya, Offshore NatGas Mozambique, Mongolia Copper Mine 3rd largest in world,
• Uninvestable Equity Markets Now, but not forever : Cuba, Saudi, Syria, Iran, Libya, Armenia, Bhutan, Myanmar, Malawi, Niger, Tajikastan, Suriname, Paraguay, Guyana, Congo, Yemen,

[bookreader · Rating 4 out of 5]

His simple thesis that frontier markets are the next emerging markets is well supported by empirical & anecdotal evidence culled from his experience over decades investing in developing markets.

[Gregg Daugherty · Rating 5 out of 5]

I liked it a lot. It had a pretty good combo of facts and theory...but then also for me the part i liked was the info on how you actually find out about these remote places.

I guess it was a bit like a Jim Rogers book but with some more facts and rigor. (His were more travel books).

I'd love to see them do a video version of due diligence in some remote place. (aside from the book)