The Citi Bank Group in their rating model on leading frontier markets shows Sri Lanka, Romania and Kenya as the most attractive markets based on six key metrics: earnings momentum, price momentum, valuation, macro growth and imbalances and monetary policy.
Citi Bank’s rating model gives investors a macro view of prospects for 12 countries.
“We thought Sri Lanka was cheap, but it turns out to be really cheap,” Andrew Howell frontier markets strategist at Citi Bank noted. “It’s a market you probably want to look at closely,” Howell, said. Frontier markets are in prime position to pioneer the use of block chain technologies and to lead in the use and development of crypto currencies, according to frontier-focused investment bank Exotix.
“We may be at the beginning of another episode of technology leapfrogging as frontier economies move straight to block chain distributed ledgers and crypto currencies as alternatives for weak domestic institutions and capital controls,” Paul Domjan, Exotix’s global head of research, City Bank said.
In an interview with WSJ Frontiers, Domjan argued that block chains, which underlie cryptocurrencies such as Bitcoin and Ether, could be invaluable in recording contracts, enabling transactions and establishing ownership in countries where institutions are weak.
The cryptocurrencies themselves are already proving popular in countries such as Zimbabwe and Venezuela where faith in the conventional currency is low.
Exotix made its prediction in a report on the key themes that could provide new opportunities for investors in frontier markets. Among the other themes it identified were China’s changing engagement with frontier markets from a predominantly extractive relationship to one based more on partnership, and the impact of mobile money, particularly the evolution of e-commerce businesses built around mobile money services.
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