Caution call over investment in new markets

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ONE year after the Arab spring, when protesters ousted unpopular rulers in Tunisia, Egypt and Libya, the Association of Investment Companies (AIC) is urging consumers to “do their homework” before investing in emerging markets.

Annabel Brodie-Smith, communications director at the AIC, said that over the longer term, the performance figures for global emerging markets had been exceptional. She added: “However, this is a diverse sector, with some companies focusing on frontier markets while others take a broader emerging markets approach where exposure to frontier markets may be relatively low.”

She advised investors to carry out research before considering the emerging markets sector.

Mark Mobius, the executive chairman of Templeton Emerging Markets Group, said: “We believe that the political unrest, uncertainty and the subsequent government spending drives have created compelling investment opportunities in the region.

“In the short term, of course, it won’t be an easy road and we can expect turmoil, but over the long term it’s a very positive development because the move towards more open societies in the region creates an excellent environment for economic freedom and capital market development.”