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This media bias came to light in a little-known study published in 2005 by The African Presidential Archives and Research Center in Johannesburg, South Africa. The study puts into clear perspective the slanted coverage dished up by the media regarding frontier markets such as Africa, Eastern Europe and Latin America. While the study concerns itself with Africa, you can immediately recognize the symptomatic bias by the media in other emerging nations on the brink of economic reform. These nations -- not as far advanced as, let’s say, China, India or Russia -- are brimming with natural resources. Riding the boom in oil, gold, copper and other commodities, the frontier markets are leaping from the 19th century into the 21st century almost overnight.
Investing in Frontier Markets: Up 553% Frontier markets are flourishing all the over the world. And as long as the media continues to portray them as hot spots of carnage, chaos and corruption, investing in frontier markets will remain one of the great overlooked investments opportunities of our time For proof, look no further than the S&P IFC Global Frontier Markets index. From October 2001 to September 2007, it surged 553%. Even a bigger shocker is that the index includes companies from Bangladesh, Botswana, Columbia, Ghana, Ecuador, Pakistan, Morocco and Peru. In all, the index is comprised of companies from 22 countries that most people would never set foot in thanks to the rampant media bias I’m about to reveal. The growth in frontier markets is not an economic blip: The S&P IFC Global Frontier Markets index has returned an average of 37% over the past five years. Investing in Frontier Markets: Missing Out on Big Opportunities? And yet, if you rely on the media as your primary source of investment research, you are missing out on the biggest opportunities on the planet. Read the news about Bangladesh and you’ll be inundated with articles about Islamic militants, riots and starvation. In Pakistan, the media zeroes in on al-Qaida, Iraq and rogue nuclear scientists. Through the lens of the media, Ecuador is cauldron of political turmoil, Columbia is all about military incursion and CIA shenanigans, and Venezuela is all about petrofacists, anti-Americanism and government seizures of corporate assets. And how do the media view Africa, the most resource-rich continent on the planet? Investing in Frontier Markets: A Decade of Market Reform You’ll read about blood diamonds, genocide, AIDS, starvation and rape. Yet the Survey of American Media Coverage of African Democracies: 1994-2004 (prepared for The decade of 1994 to 2004 marked an era of democratic and free market reforms. But more often than not, as the survey authors conclude, “media coverage defined this period based on episodes of violence -- wars in Angola and Congo, among other places -- and the genocide in Rwanda.” Now if you support the conclusions of this study, you will immediately recognize that the media have remained blind to one of the greatest profit windfalls for investors. Because we believe that the conclusions drawn in this powerful study can be applied to almost any frontier market ripe for investments. Investing in Frontier Markets: Africa Demonized by Media The purpose of the African survey is to catalogue and characterize the coverage of African democracies by select major American media outlets. According to the authors, the survey is indicative of the continuing challenges faced by African democracies to get fair and balanced coverage in the American press. The study selected five examples of print media: The New York Times, The Washington Post, The Wall Street Journal, USA Today and U.S. News & World Report. These publications were selected, in part, because of their influence and sources of record. Now here is a snapshot of headline topics: Elections / Politics: 538 Investing in Frontier Markets: Results of Startling Study The survey’s authors lamented that the “economic growth and expansion was often reported in terms of turmoil and disaster.” The findings included:
With South Africa dominating coverage of the continent, the study observed that an article in USA Today noted the height of American investment in South Africa was 1981, before the end of apartheid. “One could logically conclude from such coverage that violence in the name of apartheid seemed to have less of an impact on investment than violence under a black majority democratic government,” the authors wrote. The study continued that the American media tend to focus on freedom of the press in Africa. Ghana, Kenya, Nigeria and South Africa were criticized for their alleged repression of journalistic freedom. But what the American media failed to report, the study’s authors assert, is that Ghana, Kenya, Nigeria and South Africa had a larger variety of print media than most Western countries. The study pulls no punches:
Investing in Frontier Markets: The Commodities Boom What’s changed since this landmark 2005 study? In a word, commodities. The monumental mega cities under construction in China, the Persian Gulf and Russia are consuming every precious ounce of copper, steel, oil and molybdenum that can be extracted from the ground. And most of these raw materials are sourced from frontier markets. Meanwhile, as individual investors rely on the media for accurate investment research, the major investment banks have been raking in trillions based on their own private research into frontier markets. Investing in Frontier Markets: Big Money Goes for It On March 5, 2008, Merrill Lynch launched its new Merrill Lynch Frontier Index, which includes 50 stocks from the underdeveloped frontier markets, such as the United Arab Emirates, Kuwait, Nigeria, Morocco, Croatia, Pakistan, Kazakhstan and Vietnam. Clearly, Merrill Lynch knows something most investors don’t. Following on the heels of Merrill Lynch, Barclays Global Investors announced its new BGI Frontier Markets Fund on March 18, 2008. It provides exposure to 16 frontier markets, including United Arab Emirates, Kuwait, Qatar, Oman, Bahrain, Kazakhstan, Ukraine, Slovenia, Romania, Bulgaria and Estonia. Morgan Stanley Capital International is the company behind the MSCI Frontier Markets Indices. These indices cover 19 foreign countries such a Bulgaria, Croatia, Kenya, Mauritius, Kuwait, Sri Lanka and Vietnam. Investing in Frontier Markets: Support of the World Bank And now the World Bank is partnering with sovereign wealth funds (SWFs) to channel billions, if not trillions, into frontier Markets. Sovereign wealth funds are national investment groups with billions to invest. Typically, SWFs are themselves beneficiaries of the commodities boom -- the biggest and most active centered in the Middle East. Working in conjunction with the International Finance Corp. (IFC), the private investment arm of the World Bank, SWF money will be used to bolster the fortunes of frontier markets with an eye on Sub-Saharan Africa. What countries make up Sub-Saharan Africa? Well, there’s Nigeria, the region’s largest oil producer. There is copper-rich Zambia. And Cote d'Ivoire is a source of cocoa. Big investors with deep pockets can afford to dismiss the mainstream media for research. Instead, they reap billions in frontier markets from their own team of proficient research analysts. Investing in Frontier Markets: The Taipan Trader For us, this comes as no surprise. The Taipan Publishing Group has been skeptical about the mass media since our inception 20 years ago. As pioneers in investment research in frontier markets and the more mature emerging markets, our research philosophy has been to track the big money and then investigate the potential of a country by dispatching one of our analysts. The co-editor of Taipan Trader (LINK) recently returned from Morocco and Spain on a research mission. She visited the Casablanca Stock Exchange and spoke with business people. While there, she uncovered a Moroccan telecom gem with growing revenues, profits and influence. She also alerted her readers to the 20 IPOs expected to hit the Casablanca Stock Exchange, presenting them with a potential windfall. (It is our policy not to identify trading opportunities that we have disclosed to our paying subscribers.) As this white paper is being written, Sara is now in Vietnam and Singapore, conducting due diligence on those red-hot markets. Investing in Frontier Markets: On the Ground in Russia At BreakAway Investor (Link), editor Andrew Mickey has visited Russia, Thailand, British Columbia and other nations rich in raw materials in his pursuit of the best available market intelligence in frontier markets. His research has rewarded readers with a cumulative gain of 398% in 2008 so far, backed by 265% cumulative gains in 2007. Overall, our hands-on research has identified markets that have exploded over the past five years:
A decade ago, investors rarely invested in China, Russia and India. Now that those nations are making headlines every day, savvy investors are moving to frontier markets -- the markets that the media obscure with biased coverage. If you like to learn more about investing in the profitable world of frontier markets, as well as the hot sector of emerging markets, take a few minutes to read this Special Report my colleague, Chris DeHaemer, put together on this sleeping giant of India. Chris is guaranteeing that it'll deliver a triple-digit gain in the next 12 months... or you'll get your money back. Learn how you could get in on gains like this.
Originally published May 8, 2008. More Articles From Taipan Publishing Group About Investing in Frontier and Emerging Markets Foreign Cash Is Flooding Into India Useful Links About Frontier Markets Frontier Markets - the Developing Economies of the Future Frontier Markets: Big Risk, Big Profits Copyright 2007-2008, The Taipan Publishing Group, Taipan Daily and Chart of the Day, 808 St. Paul St., Baltimore, MD 21202. All rights reserved. No part of this report may be reproduced or placed on any electronic medium without written permission from the publisher. Information contained herein is obtained from sources believed to be reliable, but its accuracy cannot be guaranteed. |
