While Silk Invest noted on Friday that Mauritius will soon introduce futures trading on its SEM-7 index–a process that will take roughly six months and is part of the island’s bid to attract new local and foreign investors and increase capitalization–Financial Times reported that Indonesia, the world’s largest palm oil producer, will launch a commodities exchange by October in order to trade crude palm oil and other raw materials, as well as its own currency.  At the moment, trading of palm oil–whose futures have surged 35% this year on the back of strong Asian demand, rising oil prices and El Niño-related concerns–is centered around Bursa Malaysia in Kuala Lumpur.

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A giant leap for a frontier market. The Stock Exchange of Mauritius will soon start trading in futures. The first futures contracts will be on the SEM-7 index and on some of the most liquid stocks traded on the official market. The SEM-7 is made up of the largest companies by market capitalization, including Mauritius Commercial Bank, Naiade Resorts, New Mauritius Hotels, and State Bank of Mauritius.div class=”blogger-post-footer”img width=’1′ height=’1′ src=’https://blogger.googleusercontent.com/tracker/3742382075154765669-8433533595424155036?l=danfonds.blogspot.com’//div

“Words from the Wise” this week comes to you in a shortened format as I do not have access to my normal research resources while on the road in Europe (also see my post “Gone A.W.O.L. - to Slovenia and Switzerland“). Although very little commentary is provided, a full dose of excerpts from interesting news items and quotes from market commentators is included.

While investors’ hopes of an economic recovery might have got ahead of reality, the cartoonists continually reminded us of worrisome issues …

Source: Signe Wilkinson, Washington Post,  June 18, 2009.

The past week’s performance of the major asset classes is summarized by the chart below - a mixed bag so to speak.

Source: StockCharts.com

A summary of

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Country classification has gotten really interesting in the past couple of years with the rising interest in emerging and frontier markets. But that's probably just my inner unrepentant nerd talking.

Right now, in the wake of MSCI’s reclassification of Israel as a developed market, I’m working on a rundown of the country classifications of four major index providers: MSCI, Dow Jones, FTSE and Standard & Poor’s.

The evolution of emerging markets (and sometimes devolution of developed markets—see Greece, which could lose developed-market status in the FTSE indexes) is just particularly fascinating to me. Take some of the frontier/emerging markets that the index providers cover at the very bottom rungs of the investability ladder: Latvia? Slovakia? Trinidad & Tobago? Mauritius?

Frankly, I’m dying to know what the investment stories are behind these tiny, tiny markets. And while I believe frontier markets (like, say, Vietnam) offer some awesome investment opportunities, is anyone really itching to

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The Swan Group, one of the market leaders in the insurance sector in Mauritius, announced last month that its performance during the first quarter of the year “was not affected” despite the global slowdown.  Rather, executives noted that the firm realized a substantial increase in its excess collateral.  And while revenue life insurance premiums predictably slowed, this loss was offset by “good performance of the activities of pension.”  Moreover, citing its short-term investments, the firm stated that its investment income has “behaved fairly well” in the face of lower interest rates.

Mauritius commerical bank was allocated USD 5m out of the central banks USD 125m line to local lenders as part of the Islands small attempt to emulate the credit crunch bailouts. Despite this, the company has managed to report a rise in net income for the first half to US 57.7m. br /br /The bank is well capitalised with a capital adequacy ratio of 15%, above the 10% minimum requirement.

Year to date movements against USD.br /br /Nigeria naira -7.8%br /Kenya shilling -18.6%br /Ghana cedi -21.0%br /CFA franc -11.6%br /Morocco dirham -9.7%br /Mauritius rupee -12.8%br /Botswana pula -24.4%br /Zambia kwacha -20.9%

November inflation hit 9.9% in Mauritius for a second month running. Goods prices rose as a result of the lagged impact of currency depreciation.br /br /We expect inflation will fall significantly next year. The central bank has cut its benchmark rate from 8.25% to 7.75%, so that is already discounted.

A few things today.There is a new frontier market CEF from Morgan Stanley that has ticker FFD. Here is a little bit of info, here is a little more but for now the MS page has no info to speak of.According to the Yahoo News release, linked above, frontier can include Bahrain, Bangladesh, Botswana, Bulgaria, Croatia, Ecuador, Estonia, Ghana, Jamaica, Jordan, Kazakhstan, Kenya, Kuwait, Latvia, Lebanon, Lithuania, Macao, Mauritius, Namibia, Nigeria, Oman, Panama, Qatar, Romania, Saudi Arabia, Serbia, Slovenia, Sri Lanka, Trinidad and Tobago, Tunisia, Ukraine, United Arab Emirates and Vietnam.The money was just raised so the fund owns nothing yet. It may take a while to deploy ...