Investing in developing markets is not for the fainthearted. So it should come as no surprise that Afro-Caribbean equities took a step back from mid-June to mid-July after modest gains in the second quarter.
Poor nations offer interesting opportunities for investors seeking tomorrow’s emerging markets. Several exchange-traded fund managers are already investing in Africa and the Caribbean, taking advantage of opportunities in frontier markets that are showing promise.
As risk appetite swells, investors are moving money to the smallest, most volatile markets in Africa and the Caribbean, lured by a growing sense that a recovery for the global economy is under way and investment in these frontier markets will reap hefty returns.
Investors are putting their money back into stocks, pushing equity markets slightly higher in Africa and the Caribbean. Banking and commodities are leading the charge amid signs the world economy is stabilizing. The gains, though still fragile, offer glimmers of hope.
The question facing investors in February was what it will take to change the stubborn trends of global financial markets. Emerging market stocks, including those in Africa and the Caribbean, are trying to stabilize in the wake of government efforts to increase money supply and boost lending.
The fallout from frozen credit markets permeated all sectors of developed economies and has spread to the developing world.
Van Eck Global, a money management firm in New York City, launched its African Index ETF on July 10 to give U.S. investors an opportunity to invest directly in African equity markets.