Frontier markets grabbed the headlines Monday after Kenya’s biggest IPO sent shares of one stock surging 60%. But is the risk worth the reward?
On the first day of trading shares in Kenya's Safaricom surged 60% as investors snapped up the telecom’s stock.
Analysts say growth potential for the sector is high with only a third of Kenyans holding a mobile phone. "It is the cheapest of the blue chips. We will see high turnovers," said stocks analyst Fred Mueni at Tsavo Securities. With over 860,000 shareholders, Safaricom now has the widest shareholder base of any Kenyan company.
American investors can’t buy this stock directly, explains Fast Money’s favorite emerging markets specialist, Tim Seymour.However, Britain's Vodafone leads a consortium with a 40 percent stake in the carrier. You could play it indirectly with VOD.
Or if you’re interested in broad exposure to Africa I like T. Rowe Price Africa & Middle East , as well as SPDR S&P Emerging Middle East & Africa ETF .
"Frontier markets are the next wave," says Seymour as the conversation concludes, "but investors should know going in that the volatility is going to be huge."