Asian frontier markets are a relatively under-researched asset class compared to its larger emerging market peers in the region. At times, Asian frontier markets are misunderstood and also ignored. A combination of these factors has led to very attractive valuations for Asian frontier markets while economic growth remains robust, and the demographics of this region remain extremely attractive. Below are some of the key reasons why investors should consider Asian frontier markets as part of an investment portfolio:
GDP growth rates in Asian frontier markets are significantly higher than in other regions. These superior growth rates are due to higher industrialisation, increasing exports and greater consumption resulting from very favourable demographics. Countries such as Bangladesh, Myanmar, Uzbekistan and Vietnam are expected to post robust GDP growth rates of 6-7% over the next five years, making them amongst the fastest growing globally.
(Source: International Monetary Fund)
Another attraction of Asian frontier markets is their favourable demographics with a large young population with rising disposable incomes. Countries such as Bangladesh, Pakistan and Vietnam are amongst the most populous globally, and this allows investors to participate in increasing consumption through investments in automobile, consumer staples, healthcare and modern retail companies.
(Source: United Nations Population Division)
This is one of the most important trends playing out in Asian frontier markets. Higher labour costs in China and other high-cost locations has over the years led to a shift of manufacturing activity into lower-cost destinations like Bangladesh, Cambodia, Myanmar and Vietnam. Bangladesh is now the second-largest garment exporter globally while Vietnam is transforming into a hub for electronics manufacturing with Samsung assembling a majority of its smartphones in Vietnam. Trade tensions have also played out positively for markets such as Bangladesh and Vietnam as they both have witnessed increased orders from the U.S. as well as more factory relocations from China.
*Rebased to 100 (2006). RMG: Ready Made Garments
(Source: Bangladesh Garment Manufacturers & Exporters Association,
General Statistics Office of Vietnam)
Since Asian frontier markets are relatively under-researched and at times misunderstood, valuations are not demanding and allow investors to take a longer-term view for a company’s or economy’s growth to play out. As can be seen in the chart below, Asian frontier markets are trading at big discounts to their emerging market peers despite having prospects for sound earnings growth going forward.
(Source: Bloomberg, as of 31st March 2024)
Frontier markets in Asia have historically displayed low correlations with developed markets while some markets such as Bangladesh and Iraq have a very low correlation with the MSCI World Index. This kind of diversification is not available in other equity asset classes and provides much-needed diversification for investors.
(Source: Bloomberg, since inception, based on monthly data, as of 31st March 2024)
Please use the form below to update your subscription details. You can also unsubscribe from our newsletter by clicking the “Unsubscribe” link at the bottom of the form.
Your email address has been removed from our newsletter mailing list,
in the future you will not receive our newsletter.
Dear reader of the Asia Frontier Capital newsletter. We are sorry to see you unsubscribe from our newsletter. By unsubscribing you will no longer receive Asia Frontier Capital's monthly updates or ad-hoc messages about developments. Please leave a short comment to let us know why you are unsubscribing or how we could improve our newsletter.
It is important that you read the contents of this notice carefully before accessing the www.asiafrontiercapital.com website. This notice governs your access to and use of the website. By accessing the website you agree to accept the terms of this notice and the following terms of use. If you do not agree to abide by these, you must stop using this website immediately.
The information contained in this section is provided for reference only and does not constitute a distribution, an offer to sell or a solicitation of an offer to buy any securities.
This web site is for information purposes only and does not constitute an offer to sell or a solicitation to buy. Past performance is not indicative of future results. No assurance can be given that the investment objective will be achieved or that an investor will receive a return of all or part of his/her initial capital and investment results can fluctuate substantially over any given time period. Any questions should be directed to an approved Asia Frontier Capital Limited and/or Asia Frontier Investments Limited and or AFC Umbrella Fund and/or AFC Umbrella Fund (non-US) representative.
Each country has different securities laws and it is up to the individual to determine if they will be in compliance with their country's laws in dealing with Asia Frontier Capital Limited add/or Asia Frontier Investments Limited and or AFC Umbrella Fund and/or AFC Umbrella Fund (non-US). By going further into this site, you signify that you will be in compliance with your country's regulations and that Asia Frontier Capital Limited and/or Asia Frontier Investments Limited are not liable for any misrepresentation.
This website and all information provided on it:
The information on the website must not be relied on for purposes of any investment decisions. Investors should rely only on the fund's offering documents when making any decision to invest. Before making any decision to invest, we recommend that all relevant documents, such as reports, key investor information document and accounts and prospectus should be read, which specify the particular risks associated with investment in the Company, together with any specific restrictions applying and the basis of dealing. The contents of this website should not be construed as legal, taxation or financial advice. If in doubt you should speak to your professional adviser
Investors should note investment involves risk. The price of units may go down as well as up and you may not receive back the amount originally invested. Past performance is not indicative of future results. Changes in exchange rates may have an adverse effect on the value, price, or income of any investment. There are additional risks associated with investing in frontier, emerging and developing markets. There is no assurance or guarantee that the investment objective can be achieved and investment results may vary substantially over time.
Asia Frontier Capital Limited and/or Asia Frontier Investments Limited and or AFC Umbrella Fund and/or AFC Umbrella Fund (non-US) do not make representation that information and materials on this site are appropriate for use in all jurisdictions available on the web, or that transactions, securities, products, instruments or services offered on this site are available or indeed appropriate for sale or use in all jurisdictions, or by all investors or other potential clients. Those who access this site do so on their own initiative, and are therefore responsible for compliance with applicable local laws and regulations. By accessing each site, the entrant has agreed that he/she has reviewed the site in its entirety including any legal or regulatory rubric.
To the best of its knowledge and belief, Asia Frontier Capital Limited and/or Asia Frontier Investments Limited and or AFC Umbrella Fund and/or AFC Umbrella Fund (non-US) consider the information contained herein is accurate as at the date of publication. Under no circumstances should this information or any part of it be copied, reproduced or redistributed.
By proceeding to access information contained herein, users are deemed to be representing and warranting that they are either Hong Kong Professional Investor or are observing the applicable laws and regulations of their relevant jurisdictions.
Under Cap 571 of the Hong Kong "Securities & Futures Ordinance" Schedule 1:
any person of a class which is prescribed by rules made under section 397 of this Ordinance for the purposes of this paragraph as within the meaning of this definition for the purposes of the provisions of this Ordinance, or to the extent that it is prescribed by rules so made as within the meaning of this definition for the purposes of any provision of this Ordinance.
This website has not been reviewed by the Securities and Futures Commission "SFC" in Hong Kong.