Emerging Market Investors Turn to Frontier Markets Amid Trump's Unpredictable Policies
As trade tensions intensify and global uncertainty looms, investors are seeking refuge in frontier markets deemed less vulnerable to President Trump's policy shifts. While frontier markets traditionally carry more risk, they offer shelter from the volatility caused by Trump's tariffs and other measures.
Notable frontier economies with strong growth prospects and positive outlooks include Serbia, Zambia, Ghana, and Sri Lanka. These markets are insulated from Trump's trade actions and can focus on domestic reforms and economic growth.
In Eastern Europe, Serbian local bonds are viewed as attractive investments due to the region's strengthening economy.
Historically high-yield debt investments from countries such as Argentina, Lebanon, Ukraine, and Ecuador have outperformed in recent years, driven by local market dynamics and macroeconomic factors beyond traditional risk-on/risk-off scenarios.
Frontier markets in Africa, particularly, are seen as less exposed to geopolitical and global macro influences. Egypt, Nigeria, and the Dominican Republic present investment opportunities, while Turkey and South Africa offer potential in larger emerging markets due to their reduced dependence on U.S. exports.
However, investors should exercise caution as not all emerging economies are immune to Trump's policies. Panama and countries that benefited from diverted Chinese trade under the previous Trump administration may face increased scrutiny and decreased investment.