The Dutch pension asset manager's Asia Pacific head of real estate says his team has just had one of its busiest years ever and that 2021 is looking similarly promising.
It decided to release this index ahead of the fleshed-out frontier range, as there are fund managers now developing exchange-traded funds on the back of it. In the fourth quarter of this year, FTSE plans to release country and regional indices covering the same markets.
MSCI and Standard & PoorÆs already offer frontier-market indices, but the FTSE offering has its differences, following the same methodology underlying its developed and emerging-market products, says Andrew Buckley, executive director in London. But criteria are less onerous.
FTSE has 21 criteria that a market must pass to be included in its developed-market indices, and 15 for emerging markets. For frontier markets, it is sticking to just the most basic five requirements, including an independent regulatory authority, free repatriation of capital, basic transparency in pricing and reporting, basic clearing and settlement facilities, and a minimum free-float capitalisation of $750 million.
A feature on frontier markets in the July edition of AsianInvestor magazine notes $18 billion now tracks 145 markets that can be considered frontier, with most of that money from institutions and family offices. Depending on how they are counted and measured, global frontier market cap ranges from $465 billion (says EPFR) or $1 trillion (says FTSE).
The 50 stocks included in the FTSE Frontier 50 come from Vietnam (Asia Pacific); Jordan, Oman and Qatar (Middle East); Kenya, Mauritius and Nigeria (Africa); and Bulgaria, Croatia, Cyprus, Estonia, Romania and Slovenia (Europe).
The fully developed frontier series will also include Bangladesh and Sri Lanka (Asia Pacific); Bahrain (Middle East); Botswana, Ivory Coast and Tunisia (Africa); and Lithuania, Macedonia, Serbia and Slovakia (Europe).
Some countries that S&P and MSCI consider to be frontier markets, such as Pakistan and United Arab Emirates, are regarded as emerging markets by FTSE.
Mega players Nippon Life and Dai-ichi Life are looking for opportunities in higher-yield single-A US corporate bonds, which offer more appealing yields than stagnant domestic offerings.
The “lower for longer” monetary policy and stimulus packages, coupled with the rolling out of vaccine programmes favorably support real estate investing in the region, with offices and data centres presenting forward-looking opportunities.
As US fixed income default rates rose and yields fell during the pandemic, are Asian bonds, which have had more stable yields through 2020, looking more attractive?
Insto roundup: Norway's Oil Fund praises China governance efforts; NPS commits $100m to taxi-hailing app
Norway's Oil Fund welcome Chinese proposals improving transparency and shareholder protection; HK's MPF assets surge 35% year on year; Korea's NPS commits $100m to TPG consortium to invest in taxi-hailing app; Poba commits W270bn to European property; Malaysia's EPF sees investment income rise 59% year-on-year in first quarter, and more.