A List of the Most Frontier, Frontier Markets in the World
Frontier markets are inherently smaller than their developed and emerging market counterparts. But it’s not until we look at how small some frontier markets are that we appreciate how far off the beaten path (and how early in the growth cycle) these markets are. The NYSE has a market cap of $17.5 trillion USD – this is 1750 times larger than the eight smallest frontier markets combined, which have a market cap of under $10.0 billion USD total.
Without further ado, here is a list of the 8 smallest stock markets in the world, in reverse order by Market Cap:
#8: Cyprus – Cyprus Stock Exchange (CSE)
Market Cap: $2.54 billion USD
Number of Stocks: 84
Rounding out our list of smallest stock markets in the world is Cyprus, the one country part of our list on the wrong end of the growth cycle. It has become one of the smallest stock markets in the world by virtue of losing almost 99% of its value since its peak in 2007. We’ve covered it before here as a potential breakout candidate (it still hasn’t recovered yet), but the value destruction in Cyprus has been staggering.
#7: Mozambique – Bolsa de Valores
Market Cap: $1.5 billion USD
Number of Stocks: 3
As one of the poorest countries in the world, it is impressive that Mozambique has a stock exchange at all. It hasn’t grown much and is tied for the smallest stock exchange by number of listings, but a market cap of over $1 billion is nothing to sneeze at.
#6: Laos – The Lao Securities Exchange (LSX)
Market Cap: $1.4 billion USD
Number of Stocks: 5
One of the newer stock exchanges in the world, the Lao Securities Exchange has grown much faster than its counterpart in Cambodia despite it being the smaller country. The LSX Composite Index has traded sideways for the past five years, but it still managed to IPO a new company this year, Souvanny Home Center (SVN).
#5: Syria – Damascus Securities Exchange (DSE)
Market Cap: $660 million USD
Number of Stocks: 24
The Damascus Securities Exchange has managed to continue operations through the Syrian Civil War. In fact, the main market index has rallied significantly since May 2013 and is up over 50% since then. However, this is mainly in reaction to the devaluation of the Syrian pound, which has fallen 68% against the USD in that time. Still, that is not bad considering that the conflict has resulted in estimated deaths of 140k to 470k, and caused millions to flee the country.
#4: Rwanda – Rwanda Stock Exchange (RSE)
Market Cap: $480 million USD
Number of Stocks: 3 (not including cross-listings)
Rwanda is a country we’ve covered many times before, including this interview with the CEO of the largest local brokerage there. Equity values skyrocketed when there was just one stock on the exchange (Bralirwa), but since then the market has largely calmed down and the big IPO last year, Crystal Telecom, is even slightly lower than its IPO price. But with strong growth and strong rule of law, Rwanda and its stock exchange should continue to grow in the future.
#3: Cameroon – Douala Stock Exchange (DSX)
Market Cap: $317 million USD (2014)
Number of Stocks: 3
Despite getting its start in 2006, the Douala Stock Exchange is still Africa’s smallest stock market. It is home to 3 stocks: SEMC which listed in 2006, SAFACAM which listed in 2008, and SOCAPALM which listed in 2009. Unfortunately, the website has not been updated since 2013 but we did manage to find a detailed annual report on the exchange here that was quite helpful.
#2: Cambodia – Cambodia Stock Exchange (CSX)
Market Cap: $176 million USD
Number of Stocks: 3
Cambodia’s stock exchange launched with much fanfare in 2012 but soon tanked, a topic we covered in a previous post here. The CSX Index has yet to recover its losses and sits at the lows after a brief move higher in June 2015. They’re still growing with an IPO in December 2015 for the Phnomh Penh Autonomous Port, and the market is relatively advanced with helpful brokerages and internet trading. However, valuations need to improve a lot more in order to bring investors back again.
#1: Seychelles – Trop-X (Seychelles Securities Exchange)
Market Cap: $43 million USD
Number of Stocks: 4
Seychelles, the island nation off the coast of Africa with a population of under 100,000 people, is home to the world’s smallest stock exchange. Since opening at the end of 2012, Trop-X has managed to list 4 companies traded in 3 separate currencies. Given the population base it’s unlikely any stock exchange will unseat Trop-X as the smallest stock market in the world, but it remains a key claim to fame and source of financing for Seychelles.
Honourable Mention: Myanmar – Yangon Stock Exchange
The Yangon Stock Exchange is supposed to launch trading in March 2016. Foreigners are currently unable to invest in Myanmar, although there is hope that the Myanmar Companies Act will be revised to allow foreign ownership. This has meant that over-the-counter trading in the existing domestic market at the Myanmar Securities Exchange Center (MSEC) has already increased in anticipation (and speculation) of some local companies being listed on the exchange. So far six companies have been approved for trading with ten companies expected for the launch in total.