Blog: Katy AskewDeveloping markets remain tempting prize

Katy Askew | 20 May 2010

Investor attention continues to hone in on the volatile performance of stock in the US and Europe, with the FTSE, Wall Street, the French Cac 40 and Germany's Dax all declining by around 3% yesterday (19 May).

And, while the food and retail sectors are often viewed as defensive stock, the industry is not immune to swings of investor sentiment (as witnessed by the steep drop of Home Retail Group – one of the FTSE's biggest fallers).

According to investment vehicle Silk Invest, the answer is simple: investors should switch their attention to “frontier markets” in Africa, the Middle East and Asia.

“Those amongst us who can pull their heads out of the sand will encounter fundamentals in the frontier world that are very hard to resist, especially now in times of stark contrast between the economic realities at both ends of the development spectrum,” Silk Invest MD Baldwin Berges insisted in his weekly investment update yesterday.

According to Silk Invest, the fundamentals for growth offered by these emerging markets – particularly in areas such as the food industry – should outweigh any potential risks associated with investing there.

As chief executive Zin Bekkali told us last month, “risk is a global phenomenon”.

Expansion in these high-growth markets, with rapid population growth and an emerging middle class, is certainly a tempting prize – not just for the investment community but also for global corporations in the food and retail sectors.

Although recent events in Thailand illustrate that developing markets do present some particular risks, the growth potential offered is too great to be ignored.


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