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Reasons Why Companies Aren’t Investing More in Frontier Markets
Frontier markets offer a range of investment opportunities for companies looking to diversify their portfolios and potentially yield high returns.
However, these markets come with significant risks and challenges that may deter companies from investing in them.
Understanding Frontier Markets
Frontier markets are a class of emerging markets that are considered less developed than emerging markets but more developed than developing markets [3].
These markets typically have low financial links with the outside world, making them less correlated with global markets and each other. [2].
Significant Risks Involved in Frontier Markets
One of the primary reasons why companies may not invest in frontier markets is due to the significant risks involved.
These risks include currency risk, political risk, and the difficulty in accessing reliable financial information due to limited analyst coverage [1].
Lack of Liquidity
Another reason why companies may not invest in frontier markets is due to the lack of liquidity.
