Chart of the Week
Frontier or pre-emerging markets are less advanced capital markets in which investors may hope for long-term higher returns, as investors are exposed to higher risk compared to emerging and developed markets. Frontier markets typically include risks such as political instability, poor liquidity and large currency fluctuations.
Namibia is classified as a frontier market by Russell and S&P. Namibia has become a particularly interesting hotspot for oil exploration, which has subsequently put more eyes on the country. The best performing African frontier index since the start of 2020 was Zambia’s Lusaka Stock Exchange, growing by 177.1%, and is the only African frontier index to outperform the S&P500. This does not factor in liquidity and tax implications.
In comparison, the NSX Local Index returned 14.0% to investors over this period, only just surpassing the return of the MSCI Emerging Market Index (12.6%). The largest return for the NSX Local Index occurred in 2023 due to large price movements and sizable dividend payments.
Namibia currently faces issues such as a low level of liquidity and few assets for effective capital allocation. With the possibility of oil extraction in the future boosting the economy and the impending introduction of the Central Securities Depository, there could be an increase in trading activity spurred by the potential re-rating of Namibian listed assets (and the introduction of new international investors).
Namibia is classified as a frontier market by Russell and S&P. Namibia has become a particularly interesting hotspot for oil exploration, which has subsequently put more eyes on the country. The best performing African frontier index since the start of 2020 was Zambia’s Lusaka Stock Exchange, growing by 177.1%, and is the only African frontier index to outperform the S&P500. This does not factor in liquidity and tax implications.
In comparison, the NSX Local Index returned 14.0% to investors over this period, only just surpassing the return of the MSCI Emerging Market Index (12.6%). The largest return for the NSX Local Index occurred in 2023 due to large price movements and sizable dividend payments.
Namibia currently faces issues such as a low level of liquidity and few assets for effective capital allocation. With the possibility of oil extraction in the future boosting the economy and the impending introduction of the Central Securities Depository, there could be an increase in trading activity spurred by the potential re-rating of Namibian listed assets (and the introduction of new international investors).
