How big are Frontier Markets? 2017 Update


How big are Frontier Markets? 2017 Update

We did an overview of the market size and opportunity back in 2015, you can see it here.  Two years have passed since then, and we thought it was time for an update.  Back then, there were 2,000 companies with a market cap of over $50mm in our universe and 636 companies with a market cap of over $500mm.   This compares with over 2,100 companies in 2017 with a market cap over $50mm and 651 companies with a market cap over $500mm.   Most importantly, companies with a market cap of over $1bn are up 14% to 408 companies.  The distribution can be seen below:

The composition of those 2,000 companies has changed as well, with about 15% of all the companies in our universe turning over for new companies.  This is not a noteworthy number, as the Russell 3000 changes at about the same rate annually too.

The collective value of all the companies in our Investment Frontier Markets Universe is $2.1 trillion in 2017, compared to $1.9 trillion in 2015, an increase of 11%.  The Herfindahl Index for our Frontier Markets universe has also declined from 1,130 to 950 indicating a less concentrated market in terms of country concentration.  Country concentration can be seen below.

Sector diversification continues to improve as well, with a Herfindahl Index of 1,643 versus 2,508 in 2015.  This is a marked improvement, but we still wait in anticipation of an emerging IT industry from the countries we focus on.  A problem that many countries continue to have is that they become thriving homes of start-ups but before they reach real scale, they are acquired by a technology company from more established tech hubs like the US, India, or China.  The industry breakdown can be seen below.

The largest company within each country we track with information in Bloomberg is shown below.  The collective market cap across all of the largest companies is $330bn, as you can see below there is a significant concentration within sectors, but this is unsurprising as the largest companies in all economies tend to be from the same sectors.

The full list of companies can be found below.  The market opportunity within Frontier markets continues to grow larger, more diversified and with more liquidity.  As always, any questions, please let us know.

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