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Frontier Markets Draw Interest Of Investors

Frontier Markets Draw Interest Of Investors  


MSCI Barra has released a set of emerging market indexes to give exposure to single countries in addition to traditional regions.  The indexes, which can be used by exchange traded funds, cover 19 countries that the firm calls "frontier markets." These are countries whose equity markets have developed to the point where investors have said they want to track them, but might be much smaller than more developed emerging markets, such as Brazil . To be considered, a local market has to have at least two companies that are investable. Usually that means a market cap of at least $500 million, says Arun Kumar, executive director. MSCI declined to say whether there are any existing requests to use the indexes for ETFs from other firms.  The frontier markets cover 19 countries. In Europe and the former USSR, they are Bulgaria, Croatia, Estonia, Kazakhstan, Romania, Slovenia and Ukraine . In Africa, the indexes cover Kenya, Mauritius, Nigeria and Tunisia . Bahrain, Kuwait, Oman, Qatar, the United Arab Emirates and Lebanon represent the Middle East . Sri Lanka and Vietnam are the choices in Asia .  Mixing And Matching MSCI also has plans to offer indexes that combine the frontier markets with established emerging and international markets. The countries in the index are those not included in the MSCI Emerging Markets Index. MSCI measures the liquidity of the market by looking at average trading volumes for individual securities. The firm also uses market capitalization, both of individual companies and the local market as a whole. The countries are reviewed semi-annually to see if they should be moved into the Emerging Markets Index. The indexes will start on Nov. 30, and returns and levels will go out Dec. 18. MSCI already offers 10 indexes for emerging markets and 32 for developed markets. Overseas Flows Rise TrimTabs estimates that ETFs tracking international equities have picked up $32.81 bilion year to date. That's more than the $24.51 billion they picked up in all of 2006. International ETFs have drawn a lot of interest from investors because of the growth in both developed and emerging markets. Another factor is the dollar's slide. A falling dollar boosts returns on whole markets. That favors index investing, which doesn't depend on the performance of individual securities. The international ETFs' share of asset flows is about 41% of all equity ETF flows year to date. That percentage held steady during 2005 and 2006, when it was about 47% and 45% respectively.  From http://www.investors.com

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