By Jeremy Gaunt, European Investment Correspondent
LONDON, Jan 28 (Reuters) - Many of the frontier economies in Africa and the Middle East may be growing rapidly, but they are still getting short shrift from global investors.
They are attracting less than 1 percent of a typical global equity portfolio and barely registering when it comes to bonds, Reuters polls of leading investment houses showed on Thursday.
Specifically, just 0.7 percent of equity flows in a balanced portfolio were allocated to the Middle East and Africa while bond allocations to the region averaged just 0.1 percent.
The results were gleaned from responses by 44 major fund management companies in the United States, continental Europe, Britain and Japan.
They come despite signs that Africa, for one, is likely to grow rapidly over the next few years.
Growth in sub-Saharan Africa will be 1 percentage point above the global average this year, according to the Internationa Monetary Fund, which also puts eight African countries in its top 20 fastest-expanding economies in 2010.
But for global investors the issue is as much about supply as it is demand. Many countries in the Middle East and Africa simply do not have a sophisticated enough capital market.
"It is not just the economy that needs to emerge but the financial structure," said Wayne Bowers, international chief executive officer of U.S. fund firm Northern Trust Global Investments.
He also said that investors were put off the region by a lack of liquidity in what markets there are. "It may be easy to buy," he said, "but how easy is it to sell."
This may well be why other energing and frontier regions do much better in terms of investment flows.
The polls showed 7.8 percent of equity holdings among the 44 firms to be focused on Asia (excluding Japan), 2.2 percent on Latin America and 2.0 percent on emerging Europe.
For bonds, Asia ex Japan was 1.3 percent, Latin America 1.0 percent, and emerging Europe 1.4 percent.
The Reuters polls, meanwhile, show something of a divergence among investors when it comes to the Middle East and Africa.
Japanese investment houses held the highest exposure to the region in both stocks and bonds -- 0.8 percent and 0.3 percent respectively.
This is most likely a reflection of Japan's traditional focus on searching for yield. South African rand-denominatd uridashi bonds are popular with Japanese retail buyers and yield 8 percent for example.
By contrast, U.S. investors were the least interested in the region, with 0.4 percent exposure to stocks and, along with Britain and Europe, none to bonds. (Editing by Andy Bruce)