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One of the key themes of recent months in world investment has been the surprising retreat of emerging markets in the face of the repatriation of international liquidity, and the relative out performance of the frontier class of generally lesser-developed nations.
Until the aggravated situation arose in Ukraine relegating tensions in the Middle East in the table of global risks, both that country and others such as Argentina and Kazakhstan had been rather sheltered from the rush of knee-jerk investor reactions.
Now there are signs that these and similarly classified countries will come under increased scrutiny ? their underlying economic fundamentals inspected ? and that funds flows will become more discriminating between stronger and weaker names, in key variables like foreign reserves cover and debt ratios. Indeed, much attention has been paid to exchange-rate susceptibility already.
They have not been dismissed, however, as merely marginal plays in the investable universe. Indeed, given the hunger for yield that will persist as long as key interest rates remain at rock-bottom levels, those considered to be the healthier frontier markets may continue to be favoured, perhaps even benefiting from rotation within the class itself.