Frontier equity markets up 11% on the MSCI Index pulled ahead of the core’s 7.5% advance through July after prolonged underperformance, with 20%-plus gains sprinkled throughout regions. The geographically diverse so-called Next 11 was at the bottom rung with a flat result, even as it is no longer tracked as a separate category in fund structures and statistics. In the Gulf Bahrain and Kuwait rose on average 30%, as the former drew investor attention around a US Mideast post-conflict redevelopment plan, and the latter as a big weighting prepares to ascend to the main index following neighbors’ pattern after technical fixes. Oman was the exception with a 7% loss as oil price recovery has not improved debt and deficit patterns. In the Europe-CIS bloc Kazakhstan and Romania were the winners with over 20% increases, as elections set the stage for new economic policies. The first successor to post-independence President Nazarbaev, formerly the ruling party’s parliament head, signaled faster bank cleanup and large state enterprise privatization through the stock exchange, even as demonstrators challenged poll fairness. Romania’s currency has become a favorite pick with future coalitions likely to follow more orthodox fiscal, monetary and anti-corruption stances to stay in EU and IMF good graces, despite the absence of targeted aid. In the Baltics Estonia (-3%) and Lithuania (+14%) were at opposite ends, as the sub-region is gripped by Russian military intrigue and money-laundering scandals that have claimed top bank executives and government officials. Serbia (-9%) disappointed in the face of high marks under its Fund program, and Ukraine was also off 3% as the Zelensky team shapes its course, while signaling Privatbank will stay in state hands pending restructuring, after runaway legislative victories.
Morocco’s 2% uptick paced the Middle East, and in Africa Kenya was top (+15%) as Botswana and Nigeria fell over 20%. Kenya’s Finance minister faces payoff charges, and bank listings remain shunned with the statutory lending rate cap in place to neutralize further fintech penetration. Nigerian President Buhari’s second term is off to a slow start, with key cabinet appointments under consideration as multinational oil deals will be renegotiated. Domestic debt has skyrocketed from a low base, with fuel subsidies relatively untouched amid a chronic power crunch, and additional spending is forecast to cope with widespread internal displacement and army engagement from the Boko Haram threat. Zimbabwe (+15) extended last year’s positive streak as the government’s foreign exchange squeeze has opened the door to international business, while introduction of a new local electronic currency raises doubts. In Asia Bangladesh and Sri Lanka were off less than 5%, as the latter worked back from church and hotel terrorist bombings. In the Caribbean Jamaica up almost 30% took the mantle, while Trinidad slipped 3%. Jamaica’s latest IMF arrangement track record was praised, as exchange integration with neighbors once again assumed priority. Trinidad’s hydrocarbon boom has ebbed, and Barbados just completed a controversial debt restructuring criticized by commercial holders as coming out of their hide rather than the sprawling civil service. Analysts also claimed that officials overpaid for outside expert advice from London, despite the firm’s long experience with natural and self-made disasters in numerous nearby islands.