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."
Read about all the companies in the Emerging Money Top 20, an index made up of 20 firms poised to profit from explosive global growth. All of these trades are compliments of Tim Seymour, Fast Money's favorite emerging markets specialist.
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Trader disclosure: On June 9, 2008, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Macke Owns (EMC), (ATVI), (INTC), (WMT), (MSFT), (DIS); Pete Najarian Owns (AAPL), (BKC), (TSO), (XLF), (HPQ), (AMLN); Pete Najarian Owns (AA) Calls, (GME) Calls; Pete Najarian Owns (LEH) Puts; Finerman Owns (GS); Finerman's Firm Owns (AAPL), (MSFT), (TSO), (VLO); Finerman's Firm And Finerman Own (C) And (C) Leaps; Finerman's Firm Owns SPX Index Puts; Finerman's Firm Is Short (IYR), (IJR), (MDY), (SPY), (IWM); Seymour Owns (AAPL), (AA), (INTC), (MER), (TIE), (TSO), (F); Seygem Asset Management Owns (EEM), (HAL), (TTM), (MBT), (GAF)