Monday, March 17, 2008

Merrill Lynch Global Research introduces Frontier Index

by Jo Black

Merrill Lynch Global Research has introduced a new frontier equity index, which is designed to identify the largest and most liquid stocks in frontier markets. A “frontier market” is a developing economy with an undeveloped equity market.

The Merrill Lynch Frontier Index is composed of 50 stocks in the frontier markets of Europe, the Middle East, Africa and Asia, reflecting 17 countries, including the United Arab Emirates (UAE), Kuwait, Nigeria, Morocco, Pakistan, Kazakhstan, Vietnam and Cyprus.

Michael Hartnett, Merrill Lynch chief global emerging markets equity strategist, said, “The ultimate goal for many investors in 2008 is to find assets which are not closely linked to the fortunes of Wall Street. Frontier market returns are far less correlated to the performance of the S&P 500 than emerging and developed equity markets.”

In frontier markets, during the period of February 2000 to December 2007, the monthly correlation of returns for the S&P 500 was 32 percent, compared to 73 percent for emerging markets and 96 percent for developed markets.

Merrill Lynch is one of the world’s leading wealth management, capital markets and advisory companies, with offices in 40 countries and territories and total client assets of almost $2 trillion. As an investment bank, it is a leading global trader and underwriter of securities and derivatives across a broad range of asset classes and serves as a strategic advisor to corporations, governments, institutions and individuals worldwide. Merrill Lynch owns approximately half of BlackRock, one of the world’s largest publicly traded investment management companies, with more than $1 trillion in assets under management.

 

 

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