Strategy Note /
Global

FRONTIER STRATEGY Q3 17 REVIEW: Kuwait pop, Pakistan flop

    Hasnain Malik
    Hasnain Malik

    Strategy & Head of Equity Research

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    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%).