Where In the World Should I Invest: An Insider's Guide to Making Money Around the Globe
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Emerging market investing is not for the faint of heart. Countries that have frequent changes in leadership, high rates of poverty, illiteracy, and sometimes even high rates of crime are hardly the types of markets that engender confidence. However, places like China, South Africa, Brazil, and India are growing at four to five times the rate of developed markets like the United States or Europe. Emerging markets are a ride investors cannot afford to miss, but they are often missing key opportunities because they either have incorrect information about a country where they might invest, or simply don't know what questions they should be asking. Drawing on Karim Rahemtulla's personal experiences traveling the globe and exploring the capitals where business is transacted, Where in the World Should I Invest?: An Insider's Guide to Making Money Around the Globe (Wiley; April 2012; $34.95; 978-1-118-17191-2) outlines the perils, pitfalls, and rewards of investing in "low float" markets.
Analysts who garner their research from the Internet or popular news media often paint a rosier picture than what is reflected in reality. Rahemtulla set aside his rose-colored glasses nearly 20 years ago when he encountered his first taste of Chinese moonshine at a steel mill purportedly owned by a private company. This steel mill was anything but legitimate and the owners were engaged in massive fraud, one that is still being perpetrated in many Chinese companies today. However, as Rahemtualla points out, “for every suspect opportunity there lie 10 more than are legitimate, undiscovered, and waiting for the fortunate investor who has the time to look, learn, and deploy capital at a very early stage.”
Rahemtualla covers 20 countries and regions around the globe, pointing out the strengths, weaknesses, opportunities, and threats for each, as well as such investing insights as:
- Global economic contraction, especially in China, could hurt Brazil the most of any emerging market as it is reliant on exports and natural resources for a good chunk of its growth.
- The Indian rupee is not a convertible currency. It does not trade on the world markets, and its value is strictly controlled by the Reserve Bank of India. The government likes to keep the rupee cheap. Whit it keeps foreigners investing in India by buying its goods and services, the artificially low rate also means that locals have to content with high inflation on goods not subsidized by the government.
- The U.S. dollar is accepted in many places in China and is not susceptible to counterfeiting, as is the Chinese Yuan, especially the 100-Yuan note.
- Russia is fraught with risks beyond those of economic cycles, including the Russian mafia, which has close ties to the government; tensions over the huge divide between the mega rich and the poor; and questions about rule of law and market.
- South Africa produces an incredible 90 percent of the world’s platinum and 41 percent of the world’s gold; yet the money made from most of the country’s commerce finds its way onto the books of a relatively small number of companies long established in the region.
- Thailand has had 17 different governments over the past 63 years but in fact, the country is thriving financially and should be seen as an investment opportunity.
- With the exception of Mexico, Central America presents little stock investing opportunities. Real estate and retirement opportunities abound. Gone are the days when you could buy an oceanfront lot for $25,000, but properties in the $100,000 to $150,000 range still exist.
- Known for a stable banking system and sporting South America’s top sovereign debt rating, Chile has been able to balance its economic system through its rainy day fund, something rare in emerging markets of any size.
The key to successfully identifying the opportunities in emerging markets is to cut through the rhetoric and look past the smokescreens. Where in the World Should I Invest? provides a roadmap to understanding what makes an emerging market viable for enough time that it can transition into a developed market and to figuring out how to actually invest in and profit from this knowledge.
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