Investing in emerging markets

 Emerging markets investing

Developing countries, also known as emerging markets, are rapidly becoming the engine of global economic growth.

Why is it worth investing in emerging markets? To reap the benefits of a source where there is currently growth and will be expected in the future.

According to the International Monetary Fund, it is expected that emerging economies will develop two to three times faster than highly developed countries such as the US.

This fact is very important for the main players from Wall Street. Individual investors still underestimate emerging markets. Another benefit is diversification. Not every emerging country has the same growth rate.

The countries we rank as emerging markets are Argentina, Brazil, Chile, China, Colombia, Czech Republic, Egypt, Hungary, India, Indonesia, Israel, Jordan, Korea, Malaysia, Mexico, Morocco, Pakistan, Peru, the Philippines, Poland, Russia, South Africa, Taiwan, Thailand, Turkey and Venezuela.

Emerging Markets save the world economy

Emerging Markets rescued the world economy during the biggest crisis in 2008, and the global markets have been rescued from a total catastrophe by emerging countries such as China, India and Brazil.

Major Wall Street companies, such as Lehman Bros, required government rescue operations, which shaken the world economy, contributed to a deep economic recession and an even deeper crisis of confidence.

The main conclusion of the crisis is the fact that a new world order, economic conditions and market dynamics have occurred. The economies of the emerging markets have ultimately shown themselves to be a strong, essential and sustainable player in global economic growth and stabilisation.

Good balance of payments Emerging Markets

A well-balanced balance of payments emerging markets inspires much greater confidence than the balance of developed economies.

Young population working in Emerging Markets

In most emerging markets, the population is very young, which is also a young labour market.

India and Brazil, for example, have very high rates of working age to the total population. This is very important in terms of paying out pensions now and in the future.

Companies grow in size

Until now, European, Japanese and American stocks were mainly purchased by international investors, which accounted for almost half of the market capitalization. But it is changing now.

In 2005, the United States, the UK and Japan were the most liquid stocks with a total capitalisation of 60.5% of the world market, while Brazil, Russia, India, China, Hong Kong, Taiwan and Singapore accounted for only 8.3%.

In the first quarter of 2011, the US, UK and Japan accounted for only 47.4% of the world market, while the emerging markets grew to 21.6%.

Not worst results of the MSCI EAFE index

The EAFE MSCI Index measures stock performance in 21 countries, including Hong Kong and Singapore. The average annual profit of five years is slightly higher than that of 30 year old treasury bonds.

MSCI Emerging Markets Winner in the long term

Within 15 years, the MSCI index of emerging markets exceeds the advanced economies in the long term. And this trend is likely to continue as the population of emerging markets earns and spends more and more.

Emerging Markets rich in natural resources

Emerging countries have disproportionately large natural resources of raw materials, although there are exceptions such as Australia, Canada and Norway.

Brazil, which is the world's largest exporter of iron ore, is a particularly resource-rich emerging country and China its largest customers.

In addition, Brazil is one of the few countries in the world which is self-sufficient in oil and has the largest agricultural potential in the world. As world demand for food products increases, Brazil is ready to become the world's leading exporter of sugar, coffee, beef and chicken. Brazil, in combination with Argentina, is the world's largest soya bean producer.