If the dividing line between developed and emerging markets can appear arbitrary, the one between emerging and frontier markets is incomprehensible. In the real world, it is hard to see the need for such a category. But in the investment world, these definitions are an administrative convenience.
When investment bank Morgan Stanley first compiled the benchmark MSCI Emerging Markets index, it chose to exclude markets that were too small or too illiquid for inclusion and lumped them in a separate Frontier Markets index. Bizarrely, this category today includes markets in the Gulf which are economically [...]