Best of the Week
Most Popular
1.What Happened to the Stock Market Crash Experts Were Predicting - Sol_Palha
2.London Housing Market Property Bubble Vulnerable To Crash - GoldCore
3.The Plan to Control ALL Your Money is Now at Advanced Stage
4.Why Gold Is Set For An Epic Rally This Spring - James Burgess
5.MR ROBOT NHS Cyber Attack Hack - Why Israel, NSA, CIA and GCHQ are Culpable - Nadeem_Walayat
6.Emmanuel Macron and Banking Elite Win French Presidential Election 2017 - Nadeem_Walayat
7.Trend Lines Met, Technical's are Set - US Dollar is Ready to Rally (Elliott Wave Analysis) - Enda_Glynn
8.The Student Debt Servitude Sham - Gordon_T_Long
9.Czar Trump Fires Comey, Terminates Deep State FBI, CIA Director Next? - Nadeem_Walayat
10.UK Local Elections 2017 - Labour Blood Bath, UKIP Death, Tory June 8th Landslide - Nadeem_Walayat
Last 7 days
What an America First Trade Policy Could Mean for the US Dollar - 22nd May 17
Gold and Sillver Markets - Silver Price Sharp Selloff - 22nd May - 22nd May 17
Stock Market Volatile C-Wave - 22nd May 17
Stock Market Trend Forecast and Fear Trading - 22nd May 17
US Dollar Cycle : Deep Dive - 21st May 17
Bitcoin Breaks the $2,000 Mark as Cryptocurrencies Continue to Explode Higher - 21st May 17
Stocks, Commodities and Gold Multi-Market Status - 21st May 17
Stock Market Day Trading Strategies and Brief 20th May 2017 - 21st May 17
DOW Needs to Rally Big or Correction is Next - 20th May 17
EURUSD reaches DO or DIE moment! - 20th May 17
How to Get FREE Walkers Crisps Multi-packs! £5 to £28k Pay Packet Promo - 20th May 17
UK BrExit General Election 2017 - Will Opinion Pollsters Finally Get it Right? - 19th May 17
Gold Mining Junior Stocks GDXJ 2017 Fundamentals - 19th May 17
If China Can Fund Infrastructure With Its Own Credit, So Can We - 19th May 17
Evidence That Stocks are More Overvalued than Ever - 19th May 17
Obamacare May Become Zombiecare In 2018 - 19th May 17
The End of Reflation? Implications for Gold - 19th May 17
Gold and Silver Trading Alert: New Important Technical Development - 19th May 17
Subversion And Constructive Synthesis Of Capitalism And Socialism - 18th May 17
Silver: Train Leaving Station Soon! - 18th May 17
Credit and Volatility Signal That Financial Conditions Are Very Overheated - 18th May 17
Another Stock Market "Minsky Moment" or Will the Markets Calm Down? - 18th May 17
WannaCry Ransomware Virus Is a Globalist False Flag Attack On Bitcoin - 18th May 17
Euro, Stocks, Gold Momentum Extremes All Round! - 18th May 17
US Stock Market Slumps on Establishment / CIA Trump Impeachment Coup Plan - 18th May 17
Tory Landslide, Labour Bloodbath - Will Opinion Pollsters Finally Get a UK Election Right? - 17th May 17
The stock market sectors which are breaking out in 2017 - 17th May 17
A ‘Must-See’ Chart for Gold and Silver Aficionados  - 17th May 17
Will the SPX Stock Market Final Surge Fail to Appear? - 16th May 17
Claim your FREE copy of Jim Rickards’ explosive book - 16th May 17
GOP Establishment Elite Plots Trump Removal - 16th May 17
Walkers Crisps Pay Packet Cheats, Shoplifters and Staff Conning Customers - 16th May 17
Gold and Sillver Markets - Silver Price Sharp Selloff - 15th May 17
Gold Stocks Poised to Soar Sharply Higher! - 15th May 17
This One Undiscovered Pot Stock Could Help Investors Cash In On The “Green Gold Rush” - 15th May 17
WIll Trump Tax Cuts Debt Binge Save Stock Market From Double Top Bear Plunge? - 15th May 17
Trump Rally or Geopolitical Meltdown: Currency Management for Dollar Risk - 15th May 17
A Shallow Stock Market Correction? - 15th May 17

Market Oracle FREE Newsletter

Trading Commodity Markets

Emerging Stock Markets Forecast 2013: Forget the BRICs Buy These Markets Instead

Stock-Markets / Emerging Markets Nov 14, 2012 - 08:21 AM GMT

By: Money_Morning

Stock-Markets

Best Financial Markets Analysis ArticleMartin Hutchinson writes: Savvy investors know there is far more to the markets than sitting on your hands worrying about the fiscal cliff.

Believe it or not the world doesn't revolve around the United States-or the Western world.


In fact, The IMF's World Economic Outlook projects an emerging markets forecast with growth at 5.6% in 2013. That's down slightly from 2011 but far ahead of the measly 1.5% growth projected in the "advanced" economies.

That means investors need to focus heavily their investments in emerging markets, as we have done successfully over the past few years.

However, there's one new trick investors will have to learn going into 2013: the BRIC economies (Brazil, Russia, India and China) that have been so fashionable over the years, will all run into trouble next year and should be avoided.

The good news is the world is a big place and there are still emerging markets that offer investors the benefit of the world's fastest economic growth. My favorites are listed below.

But first you need to understand why the BRICs lost their luster.

2013 Emerging Markets Forecast
When Jim O'Neill of Goldman Sachs coined the BRICs acronym in 2001 it looked clever since all of them were poised to grow very rapidly and become major factors in the world economy over the next decade.

Of the four, Brazil looked like the weakest member at the time, since it was hovering close to bankruptcy. Meanwhile, Russia had a dynamic new leader, a new "flat tax" and incredible natural resource wealth.

As for the Far East, China was China, even then.

And India had a genuinely reformed its government under Atal Bihari Vajpayee, which helped cause growth to accelerate to very un-Indian levels.

I didn't trust Russia or Brazil, and China was difficult to buy back then, but I doubled my investment in the next three years on a simple investment in the Morgan Stanley India Investment Fund (NYSE: IIF).

With Goldman Sachs (NYSE: GS) recommending them, all these BRICs had to do was keep their governments under control and maintain a reasonable facsimile of free-market policies, and they would be rich within a generation -- or even sooner.

Indeed the progress over the intervening decade, in terms of Gross Domestic Product (GDP), has been rapid in all four countries. Yet in the wake of the financial crisis all four stock markets have been pretty disappointing, and now the prospects of the BRICs are nowhere near as bright as they once were.

You can chalk it up to the curse of too much money.

In the last decade monetary authorities worldwide, led by Fed chairmen Alan Greenspan and Ben Bernanke, have kept interest rates too low. Money has flooded into the emerging markets, especially the favored BRICs.

The result has been a surge of corruption in all four BRICs, accompanied by a surge in "malinvestment," a term beloved of the Austrian school of economists and describing investments, like the Nevada housing market in 2004-06, that is entirely misdirected and a waste of resources.

In China, the economy is slowing and there is a gigantic morass of bad loans in the banking system, perhaps five times the size of the bad loans about which everyone worried a decade ago. A 2008-style banking collapse and government bailout in China seems inevitable - and we know what that does to an economy!

In India the fine Vajpayee government of 1998-2004 was replaced by an ungrateful electorate with a return to the socialist Congress party, which had wrecked India's economy from 1947-1990.

The budget deficit in India, by both the central and regional governments, is gigantic now and is "crowding out" the private sector from the financial market. We also can expect a surge in inflation and a balance of payments crisis. Fortunately, there's another election in 2014; we can hope that the Indian voters do a better job than in 2004.

As for Russia, Vladimir Putin has effectively established himself as President for life, and has taken control of the economy's major sectors. The Rosneft buyout of TNK-BP indicates that the Russian state will use its resources to assert economic control. This is already working poorly, and it will stop working altogether when the price of oil drops.

Finally, Brazil is meddling in its major companies such as Petrobras and Vale, whose results have sharply deteriorated. Public spending is way out of control, mostly through subsidized loans from the state bank BNDES. Like Russia, Brazil will fairly quickly run into a balance of payments crisis and certainly won't enjoy its past rapid growth.

Since investors saw BRICs as a bloc on the way up, they will almost certainly panic simultaneously about all four on the way down, and cause a global financial crisis involving all four. That's if the Eurozone's problems or Japan's government debt don't cause one first.

Three Emerging Markets to Buy
As investors, we can only protect ourselves to a limited extent, and certainly should not "sell at the bottom," as some unfortunates did in early 2009. Certainly we should not put our money in any of the BRIC trouble spots.

However,there are other emerging markets whose prospects remain excellent. They include Singapore, Chile and the Philippines. Here's why emerging markets are better bets in 2013:

•Singapore is now at European standards of wealth and is projected by the Economist team of forecasters to grow by 4% in 2013 after a slowdown in 2012. It also ranks top or close to it on international indexes of integrity and business-friendliness. Try the iShares MSCI Singapore index ETF (NYSE: EWS).
•Chile remains the best-run country in Latin America, with high scores on integrity indexes and a strong mineral sector. Aberdeen Chile Fund (NYSE: CH) is the recommendation here.
•The Philippines has been off most investors' radar screens, but is expected to grow 6.0% in 2013. The iShares Philippines Investible Market Index ETF (NYSE: EPHE) gives investor coverage of this market, although at 17 times earnings currently its pricing is a little rich.

So yes, the parts of the world may be troubled right now, but that doesn't mean investors need to stay on the sidelines. With the right emerging markets, real growth is easier than you think.

Source :http://moneymorning.com/2012/11/14/2013-em....

Money Morning/The Money Map Report

©2012 Monument Street Publishing. All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Monument Street Publishing. 105 West Monument Street, Baltimore MD 21201, Email: customerservice@moneymorning.com

Disclaimer: Nothing published by Money Morning should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investent advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication, or after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Money Morning should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Money Morning Archive

© 2005-2016 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Catching a Falling Financial Knife