As the sister site to StreetAuthority.com, we're privy to some of the most in-depth research in the country. And Andy Obermueller, Editor-in-Chief of one of StreetAuthority's top publications, Game-Changing Stocks, thinks we're just starting to see one of three life-changing trends: The Dawn of Frontier Markets.
Andy says it best:
'Some of these nations have lagged the developed world for centuries and have been unable to mount anything like the fast rate of growth in 'developing markets' such as China or India. Frontier markets have a poor population willing to work to thrust itself into a middle class, and, with luck, they also have access to a deep cache of natural resources and an appetite for export dollars.
Just take a look at some of the results so far from three frontier markets:
Vietnam's annual growth during 2009 was +5.3%. The Ho Chi Minh Index, the measure of the country's stock exchange, gained +51.6%. Compare those results to what we saw here in the United States in 2009. In the U.S., economic growth slid into the negative, to -2.4%, and the market offered only half of Vietnam's rate of return.
In Africa, Nigeria's stunning economy is growing nearly at the rate of China's. In the first quarter of 2010, growth clocked in at +7.2%. Through mid-August, the Nigerian market gained +37.2%. The United States, expected to grow only about +2.5% this year, saw its benchmark average, the S&P 500 Index, fall by -2.2% in the same period.
The growth story continued in Kenya. This West African nation's forecasts call for its economy to surge +5.8% per year from 2011 through 2020, and then for growth to jump even higher, to +6.8% through 2030. Investors are locking in that long-term potential right now and the market is surging. The Kenyan Stock Exchange saw a +55.3% gain from January to mid-August 2010.
The correlation couldn't be clearer -- high growth rates and solid forecasts lead to fantastic market results.'
We can't tell you everything he said, because that wouldn't be fair to the subscribers he prepared his Frontier Markets report for. But you probably get the point.
Most investors have never even heard of Namibia, a country about half the size of Alaska located on the southwestern coast of Africa. Namibia has an arid climate and a population of just over 2 million, but it's also a nation of extraordinary natural resource wealth -- including uranium, lead and diamonds. With the rapid infrastructure growth in countries previously discussed, namely China and India, the demand for these resources is poised to see continued growth in the foreseeable future.
Most analysts don't cover places like Namibia. Nor do they cover places like Albania, Bangladesh, Botswana, Cyprus, Estonia, Lithuania, Romania, Sri Lanka and Mongolia. But that doesn't mean they shouldn't be on your radar.
One more prediction from Andy: 'Frontier-market investing, which has been gaining interest, will continue to roll like a juggernaut. More investment companies will create products like exchange-traded funds that simplify access to these fledgling markets and help manage risk. Brokerages will expand the exchanges they allow investors to participate in. And more foreign companies will list their securities in the United States to gain access to foreign investment.'
Investors seeking growth should look into ETFs that are already ahead of the crowd.
Keep in mind that these stocks and the associated ETFs can be quite volatile. Anything from inflationary pressures to rising interest rates to signs of a global economic cool-down could send them tumbling. Investors should also note that emerging markets carry other unique risks, such as political upheaval, regulatory changes and currency fluctuations.
P.S. -- As we mentioned earlier, Andy Obermueller is the Chief Investment Strategist for Government-Driven Investing, Fast-Track Millionaire, and Game-Changing Stocks. He spent ten years as a financial journalist, working for some of the nation's largest newspapers. At the business desk of The Star-Ledger, his market acumen helped guide the financial news read by more than a million people each day. Andy is a research fanatic who spends dozens of hours each week poring over government data and corporate finances. He then takes his most profitable ideas and presents them each month in his premium newsletters. Andy has built a successful track record of uncovering opportunities missed by most analysts and making aggressive calls to earn his readers triple-digit gains.
