Frontier markets are at the center of attention for multinational companies, according to the latest Frontier Markets Sentiment Index produced in partnership with the Wall Street Journal. Released Tuesday, the quarterly-updated FSG/WSJ index shows that corporate sentiment toward frontier markets has improved during the past three months and suggests that companies are sharpening their focus on countries including Kenya, Tunisia and Morocco.
”As big emerging markets like Brazil, Russia and China cool, companies are increasingly focused on the next opportunities for growth. For many companies that means renewed focus on African markets,” says FSG’s Global Head of Advisory and Analytics, Matt Lasov.
The Frontier Markets Sentiment Index is compiled from metadata gathered by FSG detailing which countries its clients, multinational companies, are watching for potential future investment. The index is comprised of two proprietary metrics. The first metric is a market inclusion rate that shows the percentage of multinationals tracking a specific market. The second metric is market sentiment which measures period-on-period change in the market inclusion rate. Changes in market sentiment reflect corporate perceptions about frontier markets in response to the changing business and macroeconomic environments.
One such environment exists in Africa, which continues to attract more attention than any other region and where multinational companies are staying the course despite negative news surrounding the Ebola virus outbreak.
“While the unprecedented and tragic outbreak of Ebola is affecting short-term headline growth rates, it is also temporarily changing the structure of affected economies, boosting certain sectors,” Lasov explains in the WSJ article. “In Nigeria, for example, aviation, hospitality and tourism are suffering, but e-commerce has benefitted as more people shop online instead of in public markets.”
FSG began its partnership with The Wall Street Journal nine months ago with the goal of developing a proprietary index that describes corporate sentiment about frontier markets (as defined by the WSJ). The index was constructed in partnership with the WSJ by Lasov and FSG’s Practice Leader for Global Analytics, Sam Osborn.
“By examining client utilization of our data platform, we are able to analyze how corporate sentiment toward frontier markets is changing,” says Osborn. “This analysis is an important benchmark for executives that are considering additional market investment.”
Readers can access the full article on WSJ.com.