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Investing in Emerging Markets: The BRIC Economies and Beyond

ISBN: 978-0-470-74825-1
256 pages
October 2010
Investing in Emerging Markets: The BRIC Economies and Beyond (0470748257) cover image
For more than a decade, emerging markets have proved one of the most exciting areas of investment, but the sector has not been without its dangers. Private and professional investors alike have continuously been attracted by the promise of riches on offer from countries such as China, India, Brazil and Russia but, as often as not, have been left with their fingers burnt.

Investing in Emerging Markets: The BRIC Economies and Beyond tempers the undoubted causes for emerging market optimism with a healthy dose of reality, illustrating how for every argument in favour of investing in the sector there are one or more reasons to tread very carefully indeed.

In the wake of the credit crunch and ensuing market turmoil, it also analyses where the emerging markets now fit within the global investment landscape. With the economies of the US, Europe and Japan hit by an economic crisis very much of their own making, has the credibility gap between developed and developing markets narrowed? Has the playing field become more level?

Investing in Emerging Markets: The BRIC Economies and Beyond offers a fresh, clear-eyed and objective look at an area that can only grow in importance over the next decade. It balances a realistic appraisal of the opportunities on offer from the emerging markets with a pragmatic assessment of the potential pitfalls facing investors, in the process providing an accessible introduction to newcomers and more experienced investors with a valuable and compact point of reference.

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Acknowledgements.

1 An Introduction to Emerging Markets.

1.1 Introduction.

1.2 What are Emerging Markets?

1.3 A Brief History of Emerging Markets.

1.4 A Tale of Two Decades.

1.5 Decoupling and Globalization.

1.6 After the Storm.

1.7 So Far, So Good.

1.8 Interaction Between Emerging Markets.

1.9 The Ethical Dimension.

1.10 Conclusion.

2 The Investment Case for Emerging Markets – A Balanced View.

2.1 Introduction.

2.2 Why Invest in Emerging Markets?

2.3 Capturing the Opportunity.

2.4 Demographics and Consumption.

2.5 Infrastructure.

2.6 Financial Services.

2.7 Valuations, Earnings and Return on Equity.

2.8 Some Technical Considerations.

2.9 Risk.

2.10 Matters of Trust.

2.11 Corporate Governance.

2.12 Hell is Other People.

2.13 Building Emerging Markets into a Balanced Portfolio.

2.14 How to Invest.

2.15 Bonds.

2.16 Decisions, Decisions.

2.17 Conclusion.

3 New Schools of Thought – Hype or Reality?

3.1 Introduction.

3.2 Argument 1: Decoupling.

3.3 Argument 2: The Commodities Supercycle.

3.4 Argument 3: Sovereign Wealth Funds Will Take Over the World.

3.5 Argument 4: The East is in the Ascendancy While the West is in Decline.

3.6 Argument 5: The Success of Emerging Markets is Assured.

3.7 Argument 6: EmergingMarkets are Far HigherRisk than Developed Economies.

3.8 Conclusion.

4 The "BRIC" Economies.

4.1 Introduction.

4.2 Overview.

4.3 China.

4.3.1 A Brief Economic History.

4.3.2 The Investment Case for China.

4.3.3 Industrialization and Infrastructure.

4.3.4 Country-specific Risks.

4.3.5 China’s Stock Market.

4.3.6 Conclusion.

4.4 India.

4.4.1 A Brief Economic History.

4.4.2 The Investment Case for India.

4.4.3 Infrastructure and Outsourcing.

4.4.4 Country-specific Risks.

4.4.5 India’s Stock Market.

4.4.6 Conclusion.

4.5 Russia.

4.5.1 A Brief Economic History.

4.5.2 The Investment Case for Russia.

4.5.3 Consumer Demand.

4.5.4 Country-specific Risks.

4.5.5 Russia’s Stock Market.

4.5.6 Conclusion.

4.6 Brazil.

4.6.1 A Brief Economic History.

4.6.2 The Investment Case for Brazil.

4.6.3 Post-hyperinflation.

4.6.4 Consumer Demand.

4.6.5 Country-specific Risks.

4.6.6 Brazil’s Stock Market.

4.6.7 Conclusion.

5 The "Emerged" Emerging Markets.

5.1 Introduction.

5.2 Overview.

5.3 Hong Kong – a Brief Economic History.

5.3.1 The Investment Case for Hong Kong.

5.4 Singapore – a Brief Economic History.

5.4.1 The Investment Case for Singapore.

5.5 South Korea – a Brief Economic History.

5.5.1 The Investment Case for South Korea.

5.6 Taiwan.

5.7 Investing in the Region.

5.8 Conclusion.

6 The Rest of Asia.

6.1 Introduction.

6.2 Overview.

6.3 Indonesia.

6.4 Malaysia.

6.5 The Philippines.

6.6 Thailand.

6.7 Vietnam.

6.8 Investing in the region.

6.9 Conclusion.

7 The Rest of Emerging Europe.

7.1 Introduction.

7.2 Overview.

7.3 A Brief History of Emerging Europe.

7.4 Region-specific Risks.

7.5 The Investment Case for Poland.

7.6 The Czech Republic and Hungary.

7.7 The Baltic States.

7.8 The Balkans.

7.9 Investing in the Region.

7.10 Conclusion.

8 The Rest of Latin America.

8.1 Introduction.

8.2 Overview.

8.3 A Brief Economic History of the Region.

8.4 Mexico – a Brief Economic History.

8.4.1 The Investment Case for Mexico.

8.5 Argentina – a Brief Economic History.

8.5.1 The Investment Case for Argentina.

8.6 Chile – a Brief Economic History.

8.6.1 The Investment Case for Chile.

8.7 Peru and Colombia.

8.8 Investing in the Region.

8.9 Conclusion.

9 Emerging Markets – The Final Frontiers.

9.1 Introduction.

9.2 Overview.

9.3 The Middle East.

9.4 Africa.

9.5 Investing in Frontier Markets.

9.6 Conclusion.

10 2020 Vision – The New Economic Order?

Index.

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Julian Marr is a freelance investment journalist and weekly columnist for a number of financial publications and websites. He has also held senior positions with a range of specialist and personal finance titles, including editor of Bloomberg Money and editorial director of Investment Week. He began his career as a solicitor in the City but that really was a long time ago.

Cherry Reynard is an award-winning freelance journalist. She has written for a broad range of national, consumer and specialist financial media, including The Telegraph, The Independent, What Investment, Morningstar and Institutional Investor. She began her career as an accountant with PricewaterhouseCoopers and has also worked for JP Morgan.

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