2019 provided a wide range of results for Frontier Markets. While many ended the year with negative results, a handful of markets had a lot to celebrate when the decade came to a close. Here are the 3 best performing Frontier Markets in 2019 (for comparative purposes, the MSCI Frontier Markets Index posted a gain of 12.2% over the same period).
1st – Argentina (37.6%)
The 37.6% gain in Argentina’s MERVAL Index last year placed it as the best performing Frontier Market in 2019 as well as the best performing index in Latin America, beating rivals Colombia (30.0%), Brazil (11.0%) and Mexico (4.6%). It was also one of the most volatile markets over the year and experienced dramatic increases and decreases over the period.
There were a handful of stocks that posted gains of over 50%, the best performing company was Grupo Financiero, which saw its share price rise by just over 150% in 2019. Other strong performers include Ternium (95%), Aluar Aluminio (88%), YPF (74%), Banco Macro (63%) and Holcim (62%).
There was good news for the country when MSCI announced that Argentina would officially be upgraded to an Emerging Market, prompting inflows of investment into the market. However, former president Mauricio Macri’s defeat in the primary elections to current president Alberto Fernandez in August saw the market drop by 48% in dollar terms, while the imposition of currency controls in September prompted FTSE Russell to remove Argentina from its watch list for a potential upgrade to an Emerging Market. Questions remain on whether or not Argentina will be able to retain its Emerging Market status with MSCI, with the alternatives being reclassified back as a Frontier Market or placed as a “Standalone” market, and investors will be watching closely in 2020 for any further developments.
Another interesting statistic: while the MERVAL was up 37% for the year, the reverse is true for the Argentine peso, which fell by 37% in 2019 against the dollar due to rising debt default fears, high inflation and a recession.
2nd – Romania (35.1%)
The Bucharest BET Index (BET) takes second place after posting a gain of just over 35% last year, its largest yearly growth in the last decade. Romania was also one of the strongest performers in Europe in 2019.
The BET Index, which tracks 16 of Romania’s largest companies, only had 3 companies that experienced negative returns in 2019. The rest were positive, the most notable being Societatea Nationala Nuclear’s share price increasing by 74%. Other solid performers were OMV Petrom (50%), Banca Transilvania (40%) and BRD Groupe Societe Generale (39%).
There was also good news for the European nation when FTSE Russell announced in September that it will promote Romania to the Secondary Emerging Markets category after noting the steps taking to improve liquidity on its market in order to support sizable global investment and trade. The three Romanian securities that will be added to the FTSE Emerging Markets Index (as well as the three other indexes) are Societatea Nationala De Gaze Natural, Banca Transilvania and BRD Groupe Societe Generale. The decision will become effective as of September 2020.
3rd – Jamaica (34.3%)
Completing the Top 3 is the Jamaican Stock Exchange (JSE) after it enjoyed a return of 34.26% in 2019, ranking it as the third best performing Frontier Market (a similar position it held in 2018) and also the fifth best market in the world (behind Greece, Russia, Argentina and Romania).
The JSE has been one of the few markets in the world to consistently posted gains on an annual basis and 2019 was no different. Two stocks on the exchange, Jamaica Stock Exchange Ltd and Radio Jamaica Ltd, managed to more than double their share prices at 167% and 112% respectively. Barita Investments (94%), Caribbean Cement (87%), Sagicor Group (69%) and Seprod Ltd (61%) also enjoyed a successful year.
The JSE has also announced that it will commence the trading of digital assets on its market via a platform by partner company Blockstation from June this year, with four companies from Australia, Canada and Trinidad & Tobago set to provide the first batch of security tokens to the JSE via initial public offerings (IPOs).
Special mentions: North Macedonia (32.9%); Iceland (24.7%); Bahrain (20.0%); Croatia (15.6%); Lithuania (15.5%)