Frontier and emerging markets are the best economies, but what are the two, and why are they the best?

There are three different types of economies.

Developed economies, these are countries such as England, America, Australia, Japan, and so on.

However, the opportunities in these economies have vanished, one reason why is demographics, mostly there is population decline which Is nasty for any economy.

Developed economies can be ok, for investing on a case-by-case basis, for example, I hold a few shares in Japan, UK, and USA companies, but I know the opportunities in the 21st century aren’t there.

You’re going to see more, in emerging and frontier markets, so what are emerging and frontier markets, and what is the difference?

An emerging market is a newly industrialized country, usually this consist of manufacturing companies, for example, China, Thailand, Malaysia, and Brazil, these are countries with strong demographics.

Sometimes not so much Thailand and China, since they‘re going to see population decline in about 10 to 15 years.

But, as a whole, emerging markets have little traits of frontier markets, you could think of it, as right in the middle.

It’s not quite developed, but doesn’t have the overwhelming growth that you will see in a frontier market, such as Cambodia.

So, what perks do frontier markets have, over emerging markets?

Firstly, frontier markets are way less reliant on the global economy, here’s an example.

You can see McDonalds, Starbucks, Burger King, and many other popular franchises all over the world, including in emerging markets.

This makes them very dependent on the global economy, this sadly means that if the global economy tanks emerging markets are going to go with them.

Every country has its different situations, but if your goal is to avoid a recession.

Or you’re trying to have a part of your portfolio that’s very isolated from the rest of your portfolio, then emerging markets aren’t the place you want to go.

They’re faster growing than developed markets, but they aren’t separated, they’re still very reliant on foreign investment, but, when foreign investment stops, emerging markets go right down the toilet.

However, if you look at frontier markets like Cambodia you won’t see any McDonalds.

So, what happens when McDonald’s stops expanding in the US and the economy tanks?

This means that frontier markets are more dependent on demographics and internal growth than anything else.

This means that they’re growing because the middle-class is rising, this is due to people moving from the countryside into the city for better opportunities.

Would McDonald’s come to frontier countries eventually? The answer is yes, since McDonald’s wasn’t in Vietnam a few years ago.

And when that happens Cambodia will climb up the ranks to an emerging market.

This will lead to a further increase in multi-national companies going to countries like Cambodia.

The same thing happened to Thailand 20 or 30 years ago, and they’ve done the same with Vietnam about 10 or 15 years ago.

IN CLOSING

Frontier markets are the best of both worlds, they may be lower on the economic scale, but.

They’re still the best around, you don’t have to worry about correlation to the global economy and they have a huge amount of growth potential.

Because of multi-national corporations eventually arriving, which will be a great boost to their economy.

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