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Five frontier investment hot spots
by Charlton Lumsden on Aug 13, 2013 at 08:00
We highlight five frontier markets the experts are betting on.
After the devastation of the civil war from 1955-1975, a number of economic and political reforms were carried out by the then-Communist government in 1986.
These changes led to a major boost for Vietnam’s trading credentials, becoming a member of the World Trade Organization in 2007. This has seen GDP growth projected to reach 7% in 2015.
Commenting on the growth, Dominic Striven, co-founder of Dragon Capital, previously told Citywire: ‘Vietnam offers one of the strongest and most compelling cases for the diversity and opportunities for income generation which Asia provides.’
Nigeria is the United States’ largest trading partner in Sub-Saharan Africa and, in 2006, it became the first African nation to pay off all of its Paris Club debts in 2006.
Growth is predicted to be at close to 6.5% in 2013 and a number of government policies in the last twenty years have helped to encourage foreign investment.
JM Finn fund manager Anthony Eden has previously spoken about how the market has become particularly enticing. He said: ‘Nigeria is supremely attractive. They’ve got as much oil as anyone and crucially growing at 6-7% a year they will begin to consume.’
Qatar, which has the highest GDP per capita in the world, is expected to grow at 6% in 2014, and is turning into a potential hotspot for foreign investment.
The country already boasts the third-largest oil reserves globally and the 2022 FIFA World Cup should serve to further promote the country as an attractive investment opportunity.
Qatar’s economy has been viewed as having good prospects for export growth and swelling energy revenues. Leading MENA equity manager Ibrahim Masood of Mashreq has a strong allocation to Qatar in his Mashreq Arab Tigers fund.
Ghana’s economy grew by a staggering 14% in 2011. Although growth is predicted at half that level in 2013, the service sector makes up 50% of GDP, dispelling any idea of a commodities play for potential investors within the country.
Ghana is also relatively peaceful, having been named as the fifth most politically stable African nation by the Failed States Index – an annual sovereign safety metric devised by the Fund for Peace.
Since the lifting of sanctions on Myanmar’s population after the military government was ousted in 2011, exports of rice have begun to rise after years of containment.
Meanwhile, Myanmar’s gas industry, which was nationalised in 1962, is gathering pace after a recent trade deal was made between the US. On top of this, the country’s GDP grew by 5.5% in 2011.
Adithep Vanabriksha, chief investment officer at Aberdeen New Thai, said many smaller companies were already seeking to exploit opportunities here. ‘All roads lead to Myanmar,’ he said.