2020’s Best Performing Frontier Markets
The coronavirus pandemic dominated the headlines across the world as it proved to have a significant impact socially, politically and economically. Global markets slumped around February and March 2020 and while many struggled to recover, including some Frontier Markets, others managed to see their stock markets soar. Here are the three best performing Frontier Markets in 2020. For comparative purposes, the MSCI Frontier Markets Index posted a return of -2.41% in 2020.
1st – Nigeria (50.03%)
The Nigeria All Share Index not only ranked as the best Frontier Market in 2020, but also the highest performing market in the world after it ended the year just over 50% up from the end of 2019 as investors appetite led them to flock towards blue-chip stocks amid an ultra-low yield environment on Nigeria fixed-income securities.
This was a massive change for Nigeria after the African nation featured in both 2018‘s and 2019‘s list of worst performing Frontier Markets (-17.81% and -14.6% respectively).
Seven stocks posted gains of over 100%: Equity Assurance (400%), FTN Cocoa Processors (265%), Neimeth International (259.68%), Japaul Oil and Maritime (185%), Airtel Africa (184.98%), Aiico Insurance (169.57%), Livestock Feeds (160%). Other larger companies also had a solid performance, including Dangote Cement (73.14%), MTN Nigeria Communications (52.38%) and Lafarge Africa (50%).
2nd – Iceland (24.34%)
The OMX Iceland All-Share Index’s near 25% rise meant that Iceland was the second best performing Frontier Market in 2020. The Index soared by almost 90% from its low-point in the middle of March.
Iceland is a country that has caught the attention of both MSCI and FTSE, the largest index compilers, with the former recently promoting it from a Standalone Market to a Frontier Market. Iceland’s position in the MSCI Frontier Markets Index may continue to grow, especially after Kuwait’s recent ascension to MSCI’s Emerging Markets category.
The best performing stocks include: Kvika Bank (63.52%), Trygging Gamidstodin (53.63%), Origo (50.85%), Siminn (49.77%) and Sjova-Almennar (46.26%).
3rd – Argentina (22.93%)
In what can only be described as a topsy-turvy year for Argentina, it’s flagship MERVAL Index grew by 23% in local terms last year. A shift away from fixed income securities was one of the reasons for the gain, as well as an increase in domestic investors.
In 2020, Argentina just about retained its MSCI Emerging Market status, but wasn’t as fortunate with FTSE after the index compiler removed Argentinian equities from the FTSE Frontier Markets Series before completely removing the country altogether from the Frontier Markets category.
Two companies posted gains of over 100% in their share prices: Mirgor (118.63%) and Grupo Financiero Valores (116.79%). Other strong performers included Blosas Mercados Argentinos (96.01%), Ternium Argentina (80.31%), Pampa Energia (55.92%), Loma Negra Cia Indutrial (50.25%) and Aluar Aluminio (45.68%).
However, it should be noted that the MERVAL Index fell by 36% in US dollar terms, as well as the Argentinian Peso being ranked as one of the worst currencies in the world in 2020.
Other solid performers: Bangladesh (21.31%), Vietnam (14.87%), Lithuania (14.67%), Kazakhstan (13.19%), Sri Lanka (10.52%).
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