Why invest in the BRICS, when you can invest in the emerging markets of the future?

by , 22 February 2013

All eyes will be on Durban next month as South Africa hosts the fifth annual BRICS Summit. But that's not where your focus should be. According to investment expert, Gavin Fourie, the BRICS are the emerging markets of the past. The real profits lie in the emerging markets of the future…
“Who would’ve thought that the former ‘Third World’ countries, that used to be perceived as breeding grounds for war, famine, corruption and poverty-stricken standards of living, would become the stars of the world economy today?” asked Andani Thakhathi in MoneyMorning at the start of the year.
 
And he’s right, according to statistics, close to 75% of the world’s growth over the next few years will come from emerging markets.

Right now, emerging markets in Africa, South America, Eastern Europe and Asia are growing in excess of 6% per year. “When you compare that to the low growth of America and the negative growth rates in the European Union, you can see why now is the best time for you to invest,” in emerging markets.

Bye-bye BRICS, hello emerging markets of the future

But here’s the thing: When most people think about investing in emerging markets, they think about the BRICS – Brazil, Russia, India and China. They forget about the incredible investment opportunities emerging market opportunities in Africa , Asia, Latin America and even Eastern Europe.  

Right now, the emerging market ‘gold medallist’ is Korea, Ruchir Sharma, head of emerging market equities at Morgan Stanley told MoneyWeek.

He’s also a fan of Indonesia. And he’s not alone.

Fourie believes Indonesia is a great emerging market investment opportunity too.

The reason: Right now Indonesia’s middle class is 45 million strong. And this is set to double by 2030. “As all these people join the middle class they get mortgages, cars and credit cards… And they start consuming more expensive items… This fuels even more growth,” Fourie explains.

This is significant because unlike European countries, more than 60% of Indonesia’s $1.121 trillion economy is generated by domestic consumption – exports are only worth about 25%,” says Leon Kok of The South African Investor.

And this is the case with many other emerging markets of the future, including African countries like Nigeria .

Meanwhile, many investment experts have been heard saying the “BRICS aren’t what they were”. Growth has slowed and investments there aren’t flying as they once were.

Bottom line: Emerging markets like Indonesia and Nigeria are poised for enormous growth over the next decade. They’re one of the most exciting options anywhere for investors looking to add emerging market growth to their portfolios.



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