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If you don't invest in emerging markets this year, you're going to miss out

by , 04 February 2013

Forget the US, Europe or UK, if you're looking to invest offshore, emerging markets should be your destination of choice. After all, they're fast becoming the driver of global growth and the only markets where real growth opportunities still exist today. Here's why you should invest in emerging market in 2013…
Investing offshore has always made sense for South African investors. Doing so helps you diversify away from the problems in your own country, helps protect yourself from the fluctuations of the rand and enables you to tap into sectors (like bio-tech and aircraft industries) that aren’t available on our local bourse.  

And now there’s one more reason to invest offshore

2013 is going to be the year of the offshore dividend

“With 2013 knocking on the door, now might be the time for investors to make an early New Year’s resolution to expand their dividend stocks exposure,” wrote moneymorning.com late last year.

The reason?

“Because emerging markets equities are climbing the dividend ladder as we speak,” the article added.

And they’re not alone in their thinking.

“Research from UBS indicates the 300 largest non-financial firms in the MSCI Emerging Markets Index are expected to pay $52.2 billion in dividends this year, up from $48.9 billion,” said The Financial Times.

So the time has come to consider investing in emerging markets – especially in stocks with high dividend yields.

Add in the fact that many of the world’s emerging market leaders have a better exchange rate than the rand and the case for investing in emerging market dividend payers is even more tantalising.

Which emerging market should you invest in?

One of the best emerging markets to invest in right now, according to the experts at The South African Investor, is Indonesia.

They cite three reasons why investors should plough into Indonesia:
  • Its population has money to spend! Not only is the number of Indonesian households with $5,000 in annual disposable income expected to grow from 36% of the population currently to 58% by 2020, but the Indonesian population is virtually debt-free.
  • Its economy is set to join the world’s top ten economies by 2020 – in fact, where emerging market powerhouses’ growth has slowed down, Indonesia’s economy posted its fastest growth for 15 years in 2011.
  • Indonesia’s protected from developed market downside. How? Because more than 60% of Indonesia’s $1.121 trillion economy is generated by domestic consumption – exports are only worth about 25%.
No matter how you look at it, getting a slice of emerging market growth is a great way to boost your investment portfolio’s return. Investing in Indonesia or an emerging market growth story like it is a great way to do so.

If you don't invest in emerging markets this year, you're going to miss out
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