Russia

  • Overtaken Saudi Arabia as world’s largest oil producer and holding the world’s largest natural gas reserves
  • One of the top producers and consumers of electric power
  • One of top suppliers in wheat, steel and aluminium
  • The nation’s wealth is largely controlled by a handful of oligarchs that own Russia’s biggest oil and raw materials companies

 

India

  • Strong domestic demand holds up the Indian economy and contributes to GDP
  • A lot of outsourcing of IT work goes to India from other countries
  • One of largest cotton producer in the world
  • Problems include poverty, corruption and political tensions with Pakistan
  • Main output is services

 

Brazil

  • Has experienced downturns in recent years
  • Has a diversified economy and exports oil, gas, metals, coffee, wheat
  • China is its major trading export partner
  • Brazilian stock market is dominated by commodity stocks mainly Vale (iron-ore) and Petrobras (oil)
  • Risks with investing in brazil include political instability, corruption, whether or not brazil can maintain its economy as oil reserves deplete

 

South Africa

  • Rich in resources
  • Risks include political instability, high unenemployment, inflation, debt problems

 

China

  • World second largest economy
  • Experiencing a manufacturing slowdown
  • World’s largest importer of oil
  • Main output is manufacturing goods
  • Will focus on building its domestic consumption

 

Turkey

  • stable economy, domestic demand is strong, monetary policy is tight and indebtedness is low
  • main weak point is high current account deficit which leaves it dependent on volatile short-term investment to finance its trade deficit

 

Why invest in EM economies

  • High risk/high returns
  • These economies tend to enjoy higher growth rates than counterparts
  • Good diversification to your portfolio, where stocks and bonds in western world can be correlated