Julian Knight: Must we scour the final frontier for growth?

As the big 'emerging' markets do the hokey-cokey, the tiny ones come to the fore – but they're risky

Where to go for growth? It's the question all savers and investors are asking. Savers are paid nothing, while most of the developed world's economies are in their worst state since the Second World War.

Much of the eurozone is in recession, or heading for it. The Americans have lost their Midas touch and in Blighty we have Seventies-style "stagflation" potentially rearing its ugly head.

Against this backdrop, many look east to China, India and Russia, or south to Brazil; in that tired old hackneyed phrase, the "emerging market economies" (surely, they can all be considered to have emerged by now?). But there is a problem with that choice and it's encapsulated best by China. Basically, the stock markets of these economies don't move in line with the underlying "real" economy.

China has been growing at around 10 per cent a year for the past decade and a half – the fastest sustained economic expansion of any country in history. Investors buying into China in recent years should have made a killing. But they haven't. In fact, until the recent falls in Western indices, Chinese markets were only so-so performers – it's only the drop in the West that makes China look more appealing. As for the other major emerging markets, they do their own version of the hokey cokey – very volatile and at the whim of foreign investor mood, seemingly easily spooked by whether or not any price growth is just a bubble.

What's more, when Western indices tumble, big emerging markets do likewise. In the first week of August, the Brazilian Bovespa index's fall was similar to the FTSE's. The reason is that the Western economies are their customers, so any Western recession is very bad news. Yet these economies continued to do well, against many analysts' expectations, even during the major Western recession of 2008 and 2009.

If anything, the major transfer of wealth from west to east, which took place at that time and continues apace, could be said to strengthen the economic base of these countries. OK, they sell fewer plasma TVs, but they end up owning prime real estate and shares in multinationals.

In India in particular quite a bit of the consumer-goods slack was taken up by the massive middle class. By 2030, for instance, over half the middle-class people on the planet will be either Indian or Chinese.

One can believe that such economies have a genuine robustness that can see them through our troubled times, yet indices do not reflect this. The norms of investment are broken. The capitalist machine is not working logically.

But does this apply to the countries outside of the big four emerging markets – the Next Eleven, as they're called? Looking at South Korea and Turkey for instance – two great, vibrant economies – if anything, their falls have been worse than the FTSE's.

Nevertheless, Franklin Templeton – longstanding expert on emerging markets – points investors in the direction of even smaller emerging markets , so-called Frontier countries such as Nigeria, Vietnam, Peru, Saudi Arabia and Kenya.

Its reasoning is that frontier markets don't tend to move in line with either Western or big emerging markets. This may in part be due to the fact that they are such small fry that they do not interest speculators and large investors. But Templeton says that if investors get the right sector – related to the drivers of economic growth, rather than just following the national stock market – then returns can be had, regardless of eurozone crisis or bad US economic numbers.

But private investors can't access these shares directly, and have to go through a very limited number of fund management groups, who have to be trusted to sort wheat from chaff. And that takes no account of the "oh, bloody hell" factor – sudden political instability, or undemocratic action, which can throw business and trade into turmoil.

All in all, this makes frontier investing almost uniquely risky, and really just for those who can afford the risk, or with long enough before retirement to make back any losses. So I am, like millions of UK savers and investors, still looking for an answer to the question: where to look for growth?

Call RBS and Lloyds to account

Despite being largely owned by the taxpayer, Royal Bank of Scotland and Lloyds have seen fit to stop basic bank account customers from using rival ATM machines, presumably because it costs them a little money to offer this service.

Basic bank accounts were brought in by the banks at the behest of the Government – with the banks dragged in kicking and screaming – to ensure some of society's poorest had some rudimentary banking service.

This reduction in service has rightfully been described by consumer groups as a "kick in the teeth" for the most vulnerable customers, many of whom don't have the means to travel long distances to access ATMs.

The Treasury Select Committee has recently shown a lot of interest in the reduction in free-to-use machines and banks' foot-dragging over basic bank accounts. I urge the committee to write to RBS and Lloyds to ask them to reverse this decision. If this doesn't happen, the chief executives should be summoned to explain their bank's actions. For two largely nationalised banks to damage a key plank of this and the last government's financial inclusion strategy is nothing short of a disgrace, and it must be stopped immediately.

The female face of UK debt

For the first time, women make up more than half the people calling the Consumer Credit Counselling Service for help with mortgage arrears. Now, I have often despaired of the media's portrayal of women in debt difficulties. I once advised the BBC on a one-off TV programme on debt, and was saddened but not surprised that the producers thought that the only women that should be featured were 20-something west-London shopaholics (aka producers' friends) who couldn't stop spending money on oh-so-cutesy shoes.

Depressing, sexist and idiotic are three polite words to describe this portrayal. The reality of female indebtedness, as the CCCS report highlights, is that by far the biggest group aren't ditsy 20-somethings – in fact, only a minuscule fraction are shopaholics – but middle-aged women, often lone parents following a relationship breakdown. This is what I call the hidden poor: people with a mortgage – I don't say homeowners because it's actually a burden rather than a burgeoning asset; who work, sometimes holding down two jobs; and who are on their own. Very few benefits are forthcoming because they're not in social housing and earn an income, however small.

Debt used to be associated with men in this country, as they took so many of the financial decisions. Now, it has a very female face.

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