Barings’ Michael Levy outlines frontier market opportunities in 2014

Michael Levy, manager of the Baring Frontier Markets Fund, sees a number of opportunities in frontier markets through 2014, including in Nigeria, Saudi Arabia and across Asia.

There are several areas in frontier markets which, we think, will provide opportunities. One of these is in Nigerian banks, where we expect continued loan growth and improved cost controls in a market that has, in our opinion, significant room for growth. In addition, Nigeria is likely to revise its GDP methodology, which should result in a strong upward revision to the size of the national economy, highlighting it as one of the largest in Africa.

In Asia, we see broad potential for opportunities in Bangladesh, Pakistan and Vietnam. In Bangladesh, we are enthused by the potential of the pharmaceutical sector, which contains a number of strong companies. The industry has been encouraged by the government, and has expanded to a point where pharmaceutical export growth now exceeds export growth of ready-made garments.

Saudi Arabia offers, we believe, an opportunity in the Middle East. The government has sought to boost local employment for Saudi Arabian nationals, and we expect this to support the current positive trend in consumption.

In our view, the performance of frontier markets in 2014 will continue to be driven by domestic rather than global, elements. However, the improved global outlook is still likely to be positive for frontier markets on a broader level. Growth opportunities are, we believe, still intact, and we continue to look for those companies with reasonable valuations that have the ability to generate strong growth and provide positive earnings surprises.


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