Frontier markets lead the way in 2013.

11th February 2013

Fund manager Russell has constructed a series of very interesting indices covering emerging and frontier markets.These show that in the year to date frontier markets have generally out-performed the more developed emerging markets, though over such a short period of time there is a wide divergence in performance between countries as well.

A note from Russell shows that the Russell Frontier® ex-GCC* Index has returned 8.83 per cent year-to-date as of February 6th, outperforming the Russell Emerging Markets Index (-0.31 per cent) by more than 9 per cent. It adds that within each index certain country constituents have significantly outperformed the region as represented by the parent index.

Frontier ex-GCC markets Vietnam (+18.60 per cent), Nigeria (+17.70 per cent) and Argentina (+12.77 per cent) have led country constituent year-to-date for the Russell Frontier ex-GCC Index, while the Ukraine (+1.49 per cent), Pakistan (+0.62 per cent) and Tunisia (-0.21 per cent) have trailed within the Index for the same time period.

Emerging markets United Arab Emirates (+11.83 per cent), Philippines (+10.49 per cent) and Thailand (+8.22 per cent) have been the strongest performing country constituents year-to-date for theRussell Emerging Markets Index, while South Africa (-4.38 per cent), Korea (-5.86 per cent) and Malaysia (-5.98 per cent) have trailed within the Index for the same time period.  Within the RussellEmerging Markets Index, country constituents the Philippines, Thailand, Mexico and Columbia have all hit new all-time historical price level highs since the beginning of the year.

The Russell Developed Europe Large Cap Emerging Markets GeoExposure Index, designed to track the performance of companies within its parent index the Russell Developed Europe Large Cap Index with significant revenue exposure to emerging markets, has returned 3.23 per cent year-to-date as of February 8th.

Scott Crawshaw, emerging markets portfolio manager for Russell Investments says: “The wide variation of performance within emerging and frontier equity markets since the beginning of the year as demonstrated through the index returns helps illustrate the diverse nature of investment opportunities across less mature equity markets, while the Russell Developed Europe Large Cap EM GeoExposure Index returns for the same time period help illustrate the different experience an investor may have by tapping ‘indirectly’ into emerging markets through developed markets’ companies”  “And whether you are seeking direct or indirect exposure to emerging markets, it is important to work with an active manager with the insight to help you evaluate these opportunities and put them into a broader multi-asset context.”


Russell Indexes Performance

Russell Index / Country Constituent

2013 YTD Return as of 8/2/13

Russell Developed Europe Large Cap EM GeoExposure Index 3.23%
Russell Emerging Markets Index


United Arab Emirates 11.83%
Philippines 10.49%
Thailand 8.22%
Chile 6.67%
Mexico 3.24%
Indonesia 3.04%
Russia 2.55%
China 1.40%
Turkey 0.43%
India 0.41%
Brazil 0.35%












South Africa






Russell Frontier ex-GCC Index 8.83%
Vietnam 18.60%
Nigeria 17.40%
Argentina 12.77%
Kenya 10.87%
Sri Lanka 5.90%
Jordan 3.19%
Bangladesh 1.51%
Ukraine 1.49%
Pakistan 0.62%



16 thoughts on “Frontier markets lead the way in 2013.”

  1. Anonymous says:

    Hi Shaun

    Greek political dynasties of New Democracy and PASOK pretend rivalry when their leaders roomed together at Harvard, They reportedly hold much greater wealth than is possible given their historic tax declarations.

    So I suggest that kleptocracy is the cause of Greece’s economic problems. These are likely to persist both inside and outside of the Euro.

    1. Anonymous says:

      The successor of PASOK is SYRIZA which is even more populist and kleptocratic. They envisage (do not say openly) a ‘progressive’ new drachma (super-inflation warranteed) and they promise more public servants, end of austerity (with what money?) and a return to 2008 state of affairs. They like to break bonds with EU and US and go for Venezuela, Cuba and Iran. It will end in tears if elected. In this political landscape where if you are anti-Euro you have to choose either the new much worse PASOK (aka SYRIZA) (30%) or the Nazi extreme right (~13%), most people go around the Euro-friendly parties as with the others the current austerity will look a walk in the park.

      1. Anonymous says:

        Hi Vassillis

        You make an interesting point, so is there an absence of a party with pro-devaluation and Euro exit views that also has sensible/normal other policies? And if not why do you think that there isn’t one?

        1. Anonymous says:

          I have already mentioned that: Geopolitics and Is Greece west or east? Most Greeks will say west. But it is important to show clearly that you are west and not east if you are surrounded by east. Not important for Denmark but very important for Greece. Greece will always try to be in the heart of the European project whatever happens. Even with 30% unemployment people want to stay in Euro.

    2. Anonymous says:

      Hi ExpatInBG

      Perhaps Harvard is the root of more than the problems afflicting Greece as a lot of the economists who led the world into the credit crunch (Mervyn King in the UK ) went to its business school. Indeed both Mervyn King and Ben Bernanke were professors there too. All a little too incestuous I think….

  2. Anonymous says:

    Hi Shaun
    I see that you have pointed out that Portugal and now Greece are in a sustained economic depression. Do you or any of your readers have a good or even satisfactory definition of what a depression is?

    1. Justathought says:

      Hi Josephine,

      Economic growth like economic depression is merely a belief
      based principle (Irrationality at full swing)… Economic growth is simply the used of illusory abundant resources to produce waste that one develops to the “need” (belief) and supply to the market. Depression on the other hand demonstrates the limiting factors and point to the reality of disharmony between resources and needs. When human society will harmoniously live within their resources and
      will sociologically, scientifically and individualistically become responsible, maybe there will be a chance to reach a peaceful world. I might be label as an utopic dreamer.

      By the pressure of the market lace and the almighty, the human race will have to civilize itself…. Roger Waters lyrics from Amused to death, slightly changed.

  3. Anonymous says:

    Hi Midge

    The Italian problem does seem to be continuing to build. I remember pointing out some 18 months or so ago that the fiscal dynamics in Italy were deteriorating. Until then she had a national debt problem but a deficit under relative control. As ever austerity seems to be associated with a rise in fiscal problems!

    The miss-selling money may well have given us in the UK a boost which is an irony to say the least isn’t it?

  4. Paul C says:


    Thanks for reminding us that there is still an economic crisis in the western economies. There were times in the recent past, each autumn of 2009,2010,2011 when the media was full of “the debt will explode, we gotta change, it is coming”. The new Q.E. status-quo appears stable and the “survivors” are attempting business as usual whilst the “stricken” are “caged” by punishing repayment burdens.

    I wonder whether those exciting prospects for real change via honest self-reflection will ever return?

    Keep up the analysis

    1. Noo 2 Economics says:

      Hi Paul C,

      You’ve hit he nail on the head. I posted here a few weeks ago that what we have now is the “new normal”. Massive Govt intervention will continue and they will never fully sterilise their purchases but add to them, sometimes on the sly and other times quite openly.

      On punishing repayment burdens it really is the individuals’ own fault. Did they really think that cheap money could exist forever when they took out personal loans merely looking at the monthly repayments rather than the amount borrowed and the fact that rates go up as well as down? (I give you UK interest rates 1988 – 1991 approx when they almost doubled). In terms of Govt borrowing again individuals have to vote for political parties with sensible approaches to resolving the debt crisis as in slowly reducing the borrowing requirement each year until they begin to repay debts. In many ways we all get the Governments we deserve.

      1. Paul C says:

        Noo 2,
        I think I remember you “new normal” post, it stuck in my mind.

        I was not thinking at a micro-level but rather a macro or country level but your suggestion does fit there also. Take the UK and USA, they are “survivors” but only on the back of Q.E. manipulation, both countries are desperately claiming a return to “growth” that could mathematically (if ridiculously) justify their policy rescues. If you group, Greece, Spain, Portugal and Ireland together as the “stricken and caged”.

        Regarding your micro treatment, its not widely addressed in the UK but it is quite possible that there are a significant minority of “gamblers” and “Wonga disciples” who are in effect “stricken”. The stiff upper lip attitude in the UK may serve to hide folk, who have home, car, commitments but only live from day to another with income not covering out-goings.

        On the other side of the coin there are also a significant minority of folk in the UK who are multiple home owners, seeking and enjoying artificially low rates and raking in rentier incomes, they seem to drive Range Rovers in the outside lane of the M-Way. I do not think that these people think of themselves in an economy that is classed a “survivor”, they are successful…….


        1. Noo 2 Economics says:

          Hi Paul,

          Agree everything you say but in case of Piigs I think they are better to leave Euro and adopt their own currencies (which will be no walk in the park but will give an end date to their suffering), or failing that, Germany should leave. As Shauin points out in his title, just look at the GDP growth discrepancy, there is no room in such an organisation for countries whom are so far apart, as to help one will inevitably disadvantage the other(s).

  5. Patrick, London says:

    Hi Shaun,

    Apologies for going off the specific topic in your post, but I wondered whether there were any easily accessible archives of what the media/government of the day were saying towards the end of the last recession? What types of behaviour were being seen in terms of spending and lending? Given the tools used to prevent a full on crash this time, and the ensuing can-kicking that has taken place, is the current positive mood/spin the same, or very different.

    I wasn’t paying enough attention last time, as life was full of what seemed to be more meaningful distractions. 😀

    1. Anonymous says:

      Hi Patrick

      That is a good question but then we arrive at the issue of whether we should look at say 80-82 or 90-92. As the latter had sustained house price falls and the former was harsher I would go for 80-82. The catch is that it precedes the online era…

      1. Patrick, London says:

        Thanks for replying Shaun… Simon Ward was making a point about how less of the current apparent recovery is attributable to consumer spending/debt patterns than most think, and that current positive indicators are being seen that are more legitimate.

        While is still seems to me that we’re still can kicking, creating debt mountains for most of of the populace to keep slugging up until they drop dead, can you draw similar conclusions to Simon regarding the other indicators, and if so, more importantly, have a rationale as to how this is happening when we live in a globalised economy where we can’t compete on manufacturing (Outside of vacuum cleaners, folding bikes, and ARM licensing – oh and maybe military equipment). With an over stretched public sector, not enough school places, 5 years of falling real wages, renewed house price inflation… how are we managing to produce good results in the areas Simon has identified?

  6. Noo 2 Economics says:

    Glad to see my prediction made on here 6 months ago coming true. Expected Greece and the periphery to improve this year but as you say this has been at a horrific human cost and should never have been allowed to happen.

    Greece stilll needs to leave the Euro and look to the ASEAN and China for help. The euro help is more about the politicos being worried that destabilizing forces may obtain a foothold on the EZ’s eastern border from which to launch attacks than any real interest in saving Greece and it’s people, so they will continue to do the minimum required to prevent Greece from leaving, regardless of the outcome of the upcoming German election.

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