Most investors have never even heard of Namibia, a country about half the size of Alaska located on the southwestern coast of Africa. Namibia has an arid climate and a population of just over 2 million, but it's also a nation of extraordinary natural resource wealth -- including uranium, lead and diamonds.
Investors might be surprised to hear that the tiny Namibian stock market is up more than +200% since the S&P 500 hit its October 11, 2007 high. That's impressive -- particularly when you consider the S&P 500 is down more than -15% since that date. Most European markets are also lower since that time, some down even more sharply than the U.S.
Of course, the Namibian market is tiny and obscure, but it's not alone -- there are plenty of smaller foreign stock markets that have handily outperformed the S&P 500 in recent years.
Located half a world away in Asia is Vietnam, nation with a population of 87 million and a per-capita gross domestic product of just $2,600. The communist government in Vietnam has been taking steps to open up the nation's economy and encourage foreign investment and trade. Now the economy is booming and so is the market. Despite a drop in the Vietnamese Ho Chi Minh Stock Index over the past few months, it is still up close to +200% over the past five years. That's equivalent to an annualized gain of nearly +25%.
And consider the far larger and more developed countries of the Gulf Cooperation Council (GCC). The list of GCC countries includes Qatar, Saudi Arabia, Bahrain, Oman, Kuwait and the United Arab Emirates. These countries, while far larger than Namibia, are equally unknown to U.S. investors. But the Bloomberg GCC 200 Index is up over +20% since the S&P 500's October top.
These up-and-coming countries are known as 'frontier markets.' While the terms are loosely defined, frontier markets tend to be smaller and less developed than emerging markets like China and India. But their growth potential is staggering. Many of the frontier markets are showing annual economic growth of +7-14% annually. As these economies grow and consumers become wealthier, there are myriad opportunities for businesses to expand.
