It has been a bumpy month for BlackBerry vendor Research in Motion, but it looks like threats from Saudi Arabia, India and other countries may blow over.
India has delayed an August 31 deadline for shutting down messaging on about 1 million BlackBerry phones now that RIMM (quote) has agreed to hand over its once-encrypted corporate messenger files.
However, Delhi is still holding the threat of a shutdown in reserve in the event that RIMM fails to deliver.
Likewise, Saudi Arabia has gotten what it wants from RIMM and the United Arab Emirates is reportedly making “good progress” toward a deal to keep BlackBerry running in the financial hub of Dubai.
Privacy advocates and U.S. corporate users may feel more than a little threatened by RIMM’s apparent eagerness — and ability — to let these governments monitor BlackBerry messages, which were supposedly uncrackable.
However, the very fact that China and Russia allowed the devices to run on their soil in the first place should have revealed that — as we said at the time — RIMM can make a deal when it needs to.
Given the amount this stock has dropped during the now-minimal fracas, RIMM could be priced at something like a bargain level. On the other hand, the regulatory headlines squelched the announcement of the company’s new Torch smartphones, and that momentum will be tough to recover.
We talked about several frontier markets — investment opportunities like Vietnam, Tunisia, and the United Arab Emirates — this morning on CNBC’s Trading the Globe.
Frontier markets are by definition somewhat difficult for investors to get involved with. They may not yet have built out their capital processes, or may simply be somewhat obscure. Either way, trading volumes are usually spotty in all but the biggest of the large-cap names on these exchanges, which can make it hard to move in or out of these stocks quickly.
However, the rewards can be spectacular. These tend to be great stories both from a demographic perspective and in terms of growth. Many also have vast mineral wealth waiting to be unlocked.
One classic frontier market story I would highlight is Millicom (MICC), one of the big global cell phone companies. It does business across Africa, Central America and Asia, so serves as your proxy on a wide range of frontier consumer markets.
African markets as a whole are doing well. The World Cup helped bring investor attention to the region, and these markets are not highly correlated to the problems that much of the rest of the world has suffered in the last few months.
Mutual fund flows to Africa have been positive for the last 43 weeks in a row, which means these countries are going in the right direction as investment destinations. Money is flowing in, which improves liquidity and visibility, which encourages more money to flow in.
Kenya’s 20-share benchmark index is up 34% this year, Nigeria is up 22% and gold-rich Ghana is up 18%. Like Nigeria, Tunisia is potentially extremely rich in oil and could be looking at a real estate boom soon as its young population look for housing. The country is also interesting because it is so close to Europe.
Unfortunately, there are few easy ways for U.S. investors to play in Tunisia. The big stock is Banque International Arabe de Tunisie, which trades in London but not over here.
You can get into the local oil industry by buying one of the small-cap Canadian companies that do business there. Candax Energy (CXEYF) is a good example: very small, very thinly traded, but a real pioneer player:
Vietnam has become a huge and growing country: 90 million people, 26% of which are under age 14. Tourism is a key industry, which is helping to spread the use of English as a business language.
Although the country went its own way for decades, it joined the World Trade Organization in 2007 and currently has a per capita GDP roughly equivalent to Nicaragua’s — and a little below India’s.
Goldman Sachs expects to see growth of 8.2% this year. The downside of this is inflation, which came in at 8.69% in June.
There are no Vietnamese ADRs. The way to play this country is the Market Vectors Vietnam ETF (VNM), which started last year:
The United Arab Emirates
The UAE is tiny (just 5 million people) but rich in oil wealth. The country has the world’s seventh-largest crude reserves and has used that income to build out massive infrastructure in places like Abu Dhabi and Dubai.
GDP is a stunning $200 billion. Unfortunately, the country has been hit hard over the last few years by a combination of falling oil and real estate prices, which have left it much less of a go-go destination than it was before the recession.
Once again, the big stock in Dubai is one you cannot easily trade here. Depa is listed in London, but not in the United States. Instead, you need to look to regional ETFs like GULF and MES to get into these companies and play the Dubai story. There are no ADRs:
MSCI is due to make an announcement later today on whether or not the United Arab Emirates, Kuwait and Qatar will be promoted from frontier market to emerging market status. But don’t hold your breath waiting for a “yes” vote.
All three markets appear to meet the minimum market cap and liquidity requirements, but we believe they are likely to be held back by the