Strategy Note /

FRONTIER STRATEGY Q3 17 REVIEW: Kuwait pop, Pakistan flop

    Hasnain Malik
    Hasnain Malik

    Strategy & Head of Equity Research

    Tellimer Research
    28 September 2017
    Published byTellimer Research
    Frontier continues to track Emerging on performance, but not volume. In Q3 both MSCI FM and EM were up 7-8% in US$ total return terms. But average daily value traded dropped c20% qoq across the MSCI FM index (driven by Argentina and Vietnam, likely as a hangover from the June MSCI index update where hopes for a step towards EM upgrades were not met), whereas it was up c15% across MSCI EM (driven mainly by China). FM is valued on trailing P/B of 1.8x, a 5% premium to EM for the same trailing ROE of 11.6% (although relative to their respective last five-year averages, FM is at less of a premium than EM, 11% versus 16%).