What are the main strengths and weaknesses of investing into frontier markets?

Expert Answers

An illustration of the letter 'A' in a speech bubbles

The most important strength of investing in a frontier market is the potential for large returns on one's investment.  Frontier markets have not yet developed and matured.  There is still a great deal of demand that is not yet filled.  This means that firms that enter the market can grow...

Unlock
This Answer Now

Start your 48-hour free trial to unlock this answer and thousands more. Enjoy eNotes ad-free and cancel anytime.

Start your 48-Hour Free Trial

The most important strength of investing in a frontier market is the potential for large returns on one's investment.  Frontier markets have not yet developed and matured.  There is still a great deal of demand that is not yet filled.  This means that firms that enter the market can grow rapidly.

On the other hand, however, these markets can be much more risky for investors.  These markets may not have established legal protections for investors.  It is possible that governments will intrude and destroy the value of an investment.  Because these markets are still developing, they are much more unstable than settled markets.

Please look at the link for more discussion...

Approved by eNotes Editorial Team