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Invest Asian on Making the Most of Investing in Frontier Markets

By on September 8, 2017

China is the world’s second largest economy. Claims in 2016 that China’s economy was doomed was a propaganda. China is located in the eastern part of Asia. East Asia and Southeast Asia are comprised of countries that have shown a great promise for foreign investors.

Actually, it is not only because of China why this region promises greater investment opportunities. The rapid increase in the economic growth of the countries in this region is enough reason to attract investors that would give them bigger yields in the years to come.

Top Five Countries Based on Investment Scores

Reid Kirchenbauer Index evaluated the countries in East and Southeast Asia in terms of investment opportunities and gave each country an investment score. A frontier market in the name of Cambodia dislodged the more world – renowned economies in China, Japan, and Singapore in topping the list of these countries. The Philippines, Malaysia, China, and Vietnam completed the top five countries.

Frontier Market Distinguished

Based on the market classification, countries in the world may fall under one of the following: developed market, emerging market, or frontier markets. Developed markets include the United States and Australia. Tight regulation and control characterize this market. Emerging markets, on the other hand, allow foreign investment to peak. Examples are Thailand and Malaysia. Those countries that do not belong to the two classifications fall under frontier markets. Frontier markets refer to investable stock markets, which are less established compared to the emerging markets. They are also called the pre-emerging markets. Examples are Cambodia, Myanmar, and Vietnam.

The Upside and Downside of Frontier Markets

Frontier markets don’t rely on world economies unlike the developed and emerging markets. When the US economy weakens, other emerging and developed countries are also affected. The frontier market does not get affected. Frontier markets are not “recession proof” but it’s how it works with them. They skip or escape global economic and financial recession that have come to infest emerging and developed markets. However, investing in a frontier market is not that easy. There are certain barriers. Language and cultural barriers could pose certain difficulties. It is also not easy to set up a brokerage account, reliable realtor, or buy groceries in a frontier market.

InvestAsian Index ranking of countries by giving them investment scores is a great help for investors.  These investment scores can be used by foreign investors as a guide to maximizing their yields when they put their investment into a frontier market.