Iceland: Fully valued, slowing growth, FM anomaly
Index providers FTSE and MSCI are including Iceland in their frontier market (FM) equity indices even though it is far wealthier and more liquidly traded than most new markets in FM. Iceland is a fish out of water in FM and its inclusion reinforces how unfit for purpose those indices are.
But Iceland could offer FM equity portfolios very defensive sovereign risk and exposure to a high-quality global industrial in the largest stock, Marel, a food processing equipment supplier with most of its revenue base in developed markets but with a mix shift underway towards emerging ones.
In this report, we look at macroeconomic risk, equity market valuation, FM index inclusion and profile Marel and Arion Bank.
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