BOOK Frontier – Exploring the Top Ten Emerging Markets of Tomorrow, Gavin Serkin
(c) 2015 John Wiley & Sons Ltd
Gavin Serkin is Emerging Markets Editor-at-Large at Bloomberg News. You can’t learn about frontier markets without getting on the road. This book is a vividly and excitingly written travel book that combines adventures and cities with the insights and investigations of accompanying some of the world’s top money managers who know those markets and have achieved some of the best returns in their categories in the last 5-10 years.
The African markets are: Kenya with Brett Rowley of TCW Capital, Nigeria with Kevin Daly of Aberdeen Asset Management, Egypt with Andrew Stobart of Baillie Gifford and Ghana with Derrick Irwin of Wells Fargo Asset Management. Other top money managers who share their tips and advice include Mark Mobius of Templeton Asset Management and Howie Schwab of Driehaus Capital Management, including why frontier markets should be compelling.
These are men who live on the road, checking out companies in depth, and making money from them. For instance the legendary Mobius is 78 years old and spends 250 days a year travelling to manage $40 billion of assets. His Templeton Emerging Markets Investment Trust returned 360% oer the last 10 years, ranking #2 among 46 global markets investment trusts.
In Kenya, Rowley looks in depth at the top telco, a construction play and Kenya’s active bond market, indicating where background issues such as registration and indexes will affect investment attractiveness as well as weaving through macroeconomics, corruption and security.
The Nigeria chapter is as fascinating and hair-raising as you might expect with travels around Lagos and Abuja. Interviewing Ken Saro-Wiwa Jr he looks at the changes that had been achieved since Ken’s legendary father – “I am more dangerous dead”- was murdered. Daly looks at a top bank and 2 Dangote companies. The chapter also covers bonds and ethical investing with Axel Röhm who invests $6bn for PGGM.
“For frontier investors, the consumer is king. That’s because in poorer countries an increase in income has a great proportion effect in boosting consumer demand”. Stobart outlines the logic of investing in consumer stocks in frontier markets and highlights those he likes in Egypt while Serkin gets up close and personal with the army, describing a stressful day in custody while the army decide whether or not to arrest him.
Ghana is high inflation, churches and highlife music, as you might expect. With Irwin they dig into the finance industry and the cost of death, or funeral insurance, and gold mining. They also get to talk to legendary former finance minister Kwesi Botchwey and look at the effect of gas projects on the economy.
This is a fascinating combination of travelogue, investor’s notebook, analysis and people, written vividly so you feel you are alongside Serkin and his managers as they make their visits. It compares and analyzes opportunities on the 4 African markets with securities picks in Sri Lanka, Saudi Arabia, Vitenam, Argentina, Romania and Myanmar. There are some numbers to crunch on what makes leading stocks in these markets compelling, and also details of ETFs that take you to the frontier and top-performing funds.
Nigeria wins as the most promising market, despite the corruption and violence. Sanusi Lamido Sanusi tells Serkin: “As a moral issue everybody condemns corruption,” he said. “But corruption hasn’t stopped growth in China or India.” Money-making does not look at the effects on the people and their lives but the investment world is changing.
Highly recommended! You can buy it at Wiley here for £29.99 or more cheaply at Amazon Frontier: Exploring the Top Ten Emerging Markets of Tomorrow (Bloomberg Financial), helping our blog with some commission – thanks!
Serkin joined Bloomberg in 2000 and started specializing in emerging markets in 2001. He had previously written about developing economies for Portfolio International and before that was news editor for a group of newspapers in London and South-East England. His work keeps him in touch with some of the biggest investors and world leaders, chairing conferences on issues from African development and Chinese growth to Islamic finance.
Here’s more about the book, from the publisher
The money managers who came out on top in China, India, and Brazil are now focusing their attention on markets that have not yet emerged. This book applies the perspective of ten of the most successful fund managers in their field, providing an unparalleled guide to assessing investment potential in places better known for conflict, poverty and corruption.
• Discover which markets have the best prospects, and which are potential disasters
• Analyse individual markets by metrics including macro data, global relative value comparisons of stocks and bonds, buy/ sell triggers, and more
• Learn which industries, stocks and bonds should be considered in each market
• Examine each country through real-life on-the-ground assessment of corruption, conflict and other risks as well as inspirational breakthroughs that signal opportunities
This is a practical manual for all investors – whether students or professionals – wanting to get to know the most promising new markets while avoiding the pitfalls.