Investing in Emerging and Frontier Markets

  • ID: 2605591
  • July 2013
  • 292 Pages
  • Euromoney Trading Ltd
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Investing in Emerging and Frontier Markets is a practical compendium drawing together the unique and invaluable insights, wealth and knowledge and perspectives of leading experts, market practitioners, academics, consultants, lawyers, accountants and regulatory authorities into challenges and opportunities of investing in different emerging and frontier markets across business and industry sectors.

The experts in emerging markets provide wide-ranging insights into these opportunities and focus on:

- The growing weight and influence of frontier markets which are a subset of emerging markets and display many of the characteristics that emerging markets did in 1987
- The mechanisms of the fund flows and how they have affected the market
- The outlook for emerging and frontier markets and relates the growth of markets around the world to the levels of debt, currency values and other variables
- The role of sovereign wealth funds
- Small and medium enterprises and their importance in emerging markets. Their performance has often been outstanding
- The regionalisation of both bond and equity markets
- The growth of private equity in emerging markets and the READ MORE >

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Emerging and frontier markets
Harnessing the potential of the middle class
Rising capitalisation and increased diversification
Emerging market debt
A broader investor base
Compelling valuations
Risks in emerging and frontier markets
About the editor
About the contributors

1 The growing weight and influence of frontier markets
Dr Mark Mobius, Templeton Emerging Markets Group
Tomorrow’s emerging markets
A way to diversify
Long-term growth potential
Africa – a continent of opportunity
Risks investors should consider
Liquidity and low market capitalisation
On-the-ground research
Accessing frontier markets

2 The outlook for emerging and frontier markets
Charles Robertson, Renaissance Capital

3 The role of emerging markets’ sovereign wealth funds
Dr Eliot Kalter, E M Strategies Inc. and Dr Patrick Schena, The Fletcher School
Minding the institutional void
Surging SWFs in emerging economies and the paradox of outbound investment
The development agenda and the tensions of inward investment
Filling the void: reflections on a way forward

4 The importance of micro, small and medium enterprises in emerging markets
Khaleel Ahmed, IFC
The importance of small and medium enterprises
Composition of the industry
The missing middle
Issues and challenges facing the SME sector in emerging markets
The SME finance gap
Non-financial barriers
Weaknesses in credit delivery and support by financial institutions
Policy interventions designed to expand SME finance
The World Bank Group/IFC
IFI engagement with SMEs
Annex 4.1
First mover advantage: Bank Muscat targeted Oman’s unbanked SME market
Serving the female-headed SME segment: Access Bank Plc Nigeria

5 The regionalisation of emerging debt and equity capital markets
Julian Perlmutter and Piers Summerfield, Simmons & Simmons LLP
Recent developments and emerging trends in the dim sum bond market
Steady growth of the young dim sum bond market
Overview of the current dim sum bond market – certain distinctive features
The maturity profile of dim sum bond issuances
The geographical diversification of dim sum bond issuers and investors
More ‘rated’ dim sum bond issuances
Dim sum bond market trends in 2013 and beyond
Recent developments and emerging trends in Middle Eastern debt capital markets
Recent developments and emerging trends in Kenyan debt capital markets
Recent developments and emerging trends in the Nigerian debt and
equity markets

6 Risks and return expectations for emerging and frontier markets
Allan Conway, Schroders
Historic performance
Near-term prospects
Long-term outlook

7 Portfolio allocation, diversification and risks across emerging and frontier markets
Matthew Annenberg and Robin Anderson, Principal Global Investors
Diversification benefits and risks to frontier market investing

8 Looking beyond external emerging market debt
Michael Gomez, PIMCO
Local debt will continue to stand out
Investment implications

9 Exchange-traded funds and the opening up of emerging markets
Manooj Mistry, Deutsche Bank
The general benefits of accessing emerging markets via ETFs
The challenges of creating ETFs on emerging markets indices
ETF product structures
Size, scope and turnover of the market
Frontier market ETFs
Active asset allocation to emerging markets using ETFs

10 Market regulation and supervision in emerging and frontier markets
Kai-Niklas Schneider, Clifford Chance LLP and Leen Qablawi, Latham & Watkins LLP
Emerging and frontier markets
Regulatory approaches
Basic principles
Regulation in emerging and frontier markets
Which approach works best?
Principles versus rules-based approach
One-size-fits-all approach

11 Growing power of emerging market titans
Sohail Jaffer, FWU Group
Role reversal in emerging market foreign direct investment flows
The growing importance of emerging market-based transnational corporations
Go out
Private equity and sovereign wealth fund drivers of FDI
Outlook for increased ‘south-south’ investment flows
Commodity security as a driver of FDI
Risks impacting FDI flows
The risk of resource nationalisation
Security concerns: real or imagined?

12 Private equity in growth markets: changing patterns, emerging trends
Sarah Alexander, The Abraaj Group
Lessons from the first generation
A fundamental and lasting shift
Global growth markets opportunity
Private equity – access to the growth economy
Institutional investor goals
Industry maturation – delivering returns
Local support and participation
A long runway
Looking ahead – market and fund-size diversification

13 Doing valuations in emerging markets
Pär-Ola Hansson, Ernst & Young
The preferred approach to emerging-market valuation
Why the DCF model is preferable for emerging markets
Consistency and building in advantages
Limits of the guideline companies/multiples approach
The bridge: justifying paying a premium

14 Family businesses in emerging markets
Antonios Koutsoukis, Credit Suisse
Advantages of family businesses
Growing the family business
Governance risks in family businesses
Adapting to change

15 Growth of Islamic finance in emerging and frontier markets
Baljeet Kaur Grewel, Kuwait Finance House
Global Islamic finance industry
Islamic finance industry: products and services
Islamic finance: key development in emerging markets
Saudi Arabia
South Africa
Islamic Development Bank’s role in promoting Islamic finance and SMEs
Outlook and potential for Islamic finance

16 Verging on emerging: the reasons for surging investor interest in global
frontier markets asset management
David Wickham, HSBC Global Asset Management
Classifications: what are frontier markets?
Characteristics of global frontier markets: the 7Cs
Comprehensive universe
Commodity wealth
Cash returns
Cheap valuations
Considerations: navigating the risks of global frontier markets
Political risks
Commodity risks
Liquidity risks
Sector risks
Currency risks
Capital allocations to frontier markets

17 Alternative investment landscape in emerging and frontier markets
Ian Morley, Wentworth Hall Consultancy
Substantial growth in emerging and frontier markets
Emerging market’s hedge fund performance by geographical area
Type of strategies
Challenges facing emerging and frontier markets

18 Wealth management in emerging and frontier markets
Justin Ong and Darja Habarova, PricewaterhouseCoopers LLP
Asia – the new diamond in the wealth frontier
Asia’s growing financial centres for wealth management
Emergence of the Asian regional players
Investment preferences in wealth management in Asia
Preserving wealth long-term in Asia
The talent conundrum
A bright future, or a sunset industry?

19 Insurance in emerging markets
Richard Holloway and Sanket Kawatkar, Milliman
The importance of life insurance in emerging markets
Review of some of the emerging markets in Asia
Insurance markets in India and Indonesia
Future outlook and conclusions

20 Project finance in Asian emerging and frontier markets
Michael Barrow, Asian Development Bank
Good, bad and it depends
Filling the gaps
Broadening the funding sources
Creating bankable projects
In short

21 Infrastructure funds in emerging and frontier markets
Frank Kwok, Steve Gross and Melanie Gilmore, Macquarie Infrastructure
and Real Assets
Introduction – the emerging market opportunity
Challenges and characteristics of investing in emerging markets infrastructure
Long-term planning
Regulatory risks
Track record
Environmental and social concerns
Lack of resources and experience
Investing in emerging markets infrastructure
Role of development banks and other multilateral institutions
Investing through an infrastructure fund
Characteristics and returns of unlisted emerging markets infrastructure funds
Case study: Philippines Investment Alliance for Infrastructure

22 Oil and gas in emerging and frontier markets
Meb Somani, Lakhbir Sandhu, and Andrew Grant, Barclays Natural
Resource Investments
Opportunities in emerging markets for oil and gas investors
What is an emerging market, from an oil and gas perspective?
The challenges of oil and gas investment in emerging markets
Managing oil and gas investment in emerging markets

23 Renewable energy in emerging markets
Ye¸sim Bezen and Onur Ok¸san, Bezen & Partners and Claire Wilby
Introduction: renewable energy and sustainable solutions on the global agenda
Building sustainable energy strategies
Political support
Investment and financial incentives
Regulatory and legislative framework
Potential of the ‘green’ industry
Use of natural resources
Case study: Turkey
First steps: the legislative framework
Second steps: adapting the legislative framework
Next steps: recognition of market reaction
Adding a new element to get the right energy mix for Turkey: solar energy

24 Telecom tower transactions in emerging markets
Federico Membrillera, Victor Sunyer and Kamal Daswani, Delta Partners
Recent trends impacting operator’s appetite for tower transactions
Recent trends in tower investment in emerging markets
Opportunities for tower management companies
Opportunities for financial investors
Innovative tower sharing models in emerging markets
Key challenges in tower transactions in emerging markets

25 Spotlight on China
BOCI-Prudential Asset Management Ltd
The rise of the onshore equity market in China
Move towards a multi-tier stock market
Into stock futures and derivatives
The IPO market and fund industry
Opening domestic equity market to foreign investors: QFII and RQFII
Complementary development of fixed income market
The development of offshore equity market

26 Spotlight on Indonesia
Douglas Clark Johnson, Codexa Capital
Indonesia: high-fashion for a reason
Story distinguished by domestic demand
Macro analysis: the good news – and the bad
Islamic finance: fresh perspective on reform
Investment outlook: across the board potential

27 Spotlight on India
Karuna Luthar, Elara Capital
Young and able workforce
Huge potential for consumption
Women: an opportunity in waiting
Savings: help or hindrance
Literacy rates
Transparency and governance
Policies: reduction in subsidy bill
External factors
Comparative yields and growth data

28 Spotlight on Latin America: opportunities and challenges in Brazil and Mexico
Gray Newman, Morgan Stanley
Brazil: infrastructure prospects
Mexico’s moment

29 Spotlight on Turkey: searching for the correct growth model on the road to 2023
Ertunc Tumen, Ak Asset Management
Turkey gave a striking economic performance between 2002 and 2012
High hopes for 2023
But which model to follow?
Following the BRIC model?
Is the South Korean model a more realistic one to follow?
An economic growth model in Europe?
Could Turkey create an economic growth model of its own?
A stable economic background and the financing of innovative investments
Global science and technology leadership to be required in certain areas
Techno parks: a right step, but more progress required
Rise of the Anatolian tigers – the dawn of a new entrepreneurial spirit
Other challenges

30 Spotlight on Iraq: the world’s fastest growing major economy
Bartle Bull and Zaab Sethna, Northern Gulf Partners LLC
Exceptional political and macro-economic environment
Foreign investment
The Iraq Stock Exchange
Private equity opportunities in Iraq
Case study

31 Spotlight on Africa: which growth for sub-Saharan Africa? Tapping its huge agricultural potential is key
Claire Schaffnit-Chatterjee and Maria Laura Lanzeni, Deutsche Bank
A growing and increasingly diversified market
Social development remains low
Agriculture growth lags behind
Agriculture is key to growth, poverty and hunger reduction
Boosting agricultural yields inclusively
Broader, more sustainable input use
Closing the infrastructure gap
Technology development and technology transfer
Improving access to credit and insurance markets
Many wins associated with agricultural growth

Note: Product cover images may vary from those shown
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