Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Inflation Consequences for the Stock Market, FED Balance Sheet - 24th Oct 21
To Be or Not to Be: How the Evergrande Crisis Can Affect Gold Price - 24th Oct 21
During a Market Mania, "no prudent professional is perceived to add value" - 24th Oct 21
Stock Market S&P500 Rallies Above $4400 – May Attempt To Advance To $4750~$4800 - 24th Oct 21
Inflation and the Crazy Crypto Markets - 23rd Oct 21
Easy PC Upgrades with Motherboard Combos - Overclockers UK Unboxing - MB, Memory and Ryzen 5600x CPU - 23rd Oct 21
Gold Mining Stocks Q3 2021 - 23rd Oct 21
Gold calmly continues cobbling its Handle, Miners lay in wait - 23rd Oct 21
US Economy Has Been in an Economic Depression Since 2008 - 22nd Oct 21
Extreme Ratios Point to Gold and Silver Price Readjustments - 22nd Oct 21
Bitcoin $100K or Ethereum $10K—which happens first? - 22nd Oct 21
This Isn’t Sci-Fi: How AI Is About To Disrupt This $11 Trillion Industry - 22nd Oct 21
Ravencoin RVN About to EXPLODE to NEW HIGHS! Last Chance to Buy Before it goes to the MOON! - 21st Oct 21
Stock Market Animal Spirits Returning - 21st Oct 21
Inflation Advances, and So Does Gold — Except That It Doesn’t - 21st Oct 21
Why A.I. Is About To Trigger The Next Great Medical Breakthrough - 21st Oct 21
Gold Price Slowly Going Nowhere - 20th Oct 21
Shocking Numbers Show Government Crowding Out Real Economy - 20th Oct 21
Crude Oil Is in the Fast Lane, But Where Is It Going? - 20th Oct 21
3 Tech Stocks That Could Change The World - 20th Oct 21
Best AI Tech Stocks ETF and Investment Trusts - 19th Oct 21
Gold Mining Stocks: Will Investors Dump the Laggards? - 19th Oct 21
The Most Exciting Medical Breakthrough Of The Decade? - 19th Oct 21
Prices Rising as New Dangers Point to Hard Assets - 19th Oct 21
It’s not just Copper; GYX indicated cyclical the whole time - 19th Oct 21
Chinese Tech Stocks CCP Paranoia, VIES - Variable Interest Entities - 19th Oct 21
Inflation Peaked Again, Right? - 19th Oct 21
Gold Stocks Bouncing Hard - 19th Oct 21
Stock Market New Intermediate Bottom Forming? - 19th Oct 21
Beware, Gold Bulls — That’s the Beginning of the End - 18th Oct 21
Gold Price Flag Suggests A Big Rally May Start Soon - 18th Oct 21
Inflation Or Deflation – End Result Is Still Depression - 18th Oct 21
A.I. Breakthrough Could Disrupt the $11 Trillion Medical Sector - 18th Oct 21
US Economy and Stock Market Addicted to Deficit Spending - 17th Oct 21
The Gold Price And Inflation - 17th Oct 21
Went Long the Crude Oil? Beware of the Headwinds Ahead… - 17th Oct 21
Watch These Next-gen Cloud Computing Stocks - 17th Oct 21
Overclockers UK Custom Built PC 1 YEAR Use Review Verdict - Does it Still Work? - 16th Oct 21
Altonville Mine Tours Maze at Alton Towers Scarefest 2021 - 16th Oct 21
How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
The Only way to Crush Inflation (not stocks) - 14th Oct 21
Why "Losses Are the Norm" in the Stock Market - 14th Oct 21
Sub Species Castle Maze at Alton Towers Scarefest 2021 - 14th Oct 21
Which Wallet is Best for Storing NFTs? - 14th Oct 21
Ailing UK Pound Has Global Effects - 14th Oct 21
How to Get 6 Years Life Out of Your Overclocked PC System, Optimum GPU, CPU and MB Performance - 13th Oct 21
The Demand Shock of 2022 - 12th Oct 21
4 Reasons Why NFTs Could Be The Future - 12th Oct 21
Crimex Silver: Murder Most Foul - 12th Oct 21
Bitcoin Rockets In Preparation For Liftoff To $100,000 - 12th Oct 21
INTEL Tech Stock to the MOON! INTC 2000 vs 2021 Market Bubble WARNING - 11th Oct 21
AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
Stock Market Wall of Worry Meets NFPs - 11th Oct 21
Stock Market Intermediate Correction Continues - 11th Oct 21
China / US Stock Markets Divergence - 10th Oct 21
Can US Save Taiwan From China? Taiwan Strait Naval Battle - PLA vs 7th Fleet War Game Simulation - 10th Oct 21
Gold Price Outlook: The Inflation Chasm Between Europe and the US - 10th Oct 21
US Real Estate ETFs React To Rising Housing Market Mortgage Interest Rates - 10th Oct 21
US China War over Taiwan Simulation 2021, Invasion Forecast - Who Will Win? - 9th Oct 21
When Will the Fed Taper? - 9th Oct 21
Dancing with Ghouls and Ghosts at Alton Towers Scarefest 2021 - 9th Oct 21
Stock Market FOMO Going into Crash Season - 8th Oct 21
Scan Computers - Custom Build PC 6 Months Later, Reliability, Issues, Quality of Tech Support Review - 8th Oct 21
Gold and Silver: Your Financial Main Battle Tanks - 8th Oct 21
How to handle the “Twin Crises” Evergrande and Debt Ceiling Threatening Stocks - 8th Oct 21
Why a Peak in US Home Prices May Be Approaching - 8th Oct 21
Alton Towers Scarefest is BACK! Post Pandemic Frights Begin, What it's Like to Enter Scarefest 2021 - 8th Oct 21
AJ Bell vs II Interactive Investor - Which Platform is Best for Buying US FAANG Stocks UK Investing - 7th Oct 21
Gold: Evergrande Investors' Savior - 7th Oct 21
Here's What Really Sets Interest Rates (Not Central Banks) - 7th Oct 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Getting the Most Bang for Your BRIC Emerging Market Investments

Stock-Markets / Emerging Markets Jul 27, 2009 - 05:57 PM GMT

By: Kurt_Kasun

Stock-Markets

Best Financial Markets Analysis ArticleAt the end of the trading week  a Bloomberg article appeared titled “BRIC IPOs Show Region’s ‘Growing Power,’ Biggs Says,”  where famed investor and former Morgan Stanley chief global strategist Barton Biggs acknowledges that “clearly the BRICs are the big growth areas of the world.” 


Let’s see how the recent excitement about US stock markets’ move into positive territory stacks up against this year’s performance of the BRIC countries:

Not only are the BRICs on a tear, but the US dollars pain appears to be the BRIC markets’ gain as illustrated in the graph below:

Courtesy:  US Global Research http://www.usfunds.com/docs/alert/alert_print.asp

The 10% fall in the dollar is even greater than this year’s 8.4% gain in the S&P500.  The lyrics of the pop song by the group Mims come to mind… “This is why I’m hot, and this is why you’re not…”  While US exporting multinationals should benefit from a declining dollar, their gains pale in comparison to the potential for the BRICs and other emerging markets (particularly the commodity-based countries) to continue their surge. 

Some key questions investors looking to participate might consider:

  1. What portion of my portfolio should I allocate to the “BRICs”?
  2. Are the bulk of the BRIC equity gains behind them?
  3.  Will lagging US performance eventually catch up?
  4. How does one invest in the “BRICs”?

As each individual investor’s situation is unique, they should consult their financial advisor in answering all of those questions, but I will take a stab at some general guidance regarding the fourth point.

There are three primary ways to invest in BRIC country equity markets:

  1. Buy individual stocks (either through a country market exchange or an American Depository Receipt (ADR) in the US).
  2. Buy an Exchange Traded Fund (ETF) (either a series of country ETFs – Brazil, Russia, India, China – or one BRIC ETF such as EEB or BIK).
  3. Buy shares in a BRIC mutual fund (same as with ETFs—either purchase 4 mutual funds representing each of the BRIC countries or one mutual fund with all of the BRICs).

For most people, my general preference is option 3, and just buying shares in one BRIC mutual fund.  You should look for a solid manager with a strong track record.  The BRICs are still emerging markets and are highly volatile.  Many fund managers are quick to point out that these markets are highly vulnerable to 15-20% corrections.  This makes their experience and expertise all the more valuable.

Moreover, the relative valuation of one BRIC nation versus another moves like a pinball and presents opportunities for the most skilled managers.  For instance, India’s market shot up as the result of their recent elections.  India’s stock market has experienced its biggest gains since 2003 and this potentially represents an “overshoot”.  India’s market multiple of 16 still trails China’s 19, but is more than double Russia’s which stands at 7.  Two recent articles in financial media publications extol the virtues of putting money to work in Russia.  In the August 3 edition of Forbes Richard Morais authors a very well-written piece “The Russian Bear’s Bull” -- the tagline is “Russia, the ugly stepsister of emerging economies, has plenty of promise for those who can stomach the wild ride.”  I was surprised to learn that Russia had the world’s third largest foreign exchange reserves and that their total market capitalization of just under $500 billion was on par with Pakistan’s and Jordan’s. 

In this weekend’s edition of Barron’s an interview with Arjun Divecha, manager of GMO Emerging Markets III Fund, (“The Four Cheapest Plays in Emerging Markets”) reveals that he is currently “overweight” Brazil and Russia and underweight China and India.  He lays out strong reasoning to make his case.  The point is not that investor’s should ‘go long’ Brazil and Russia and ‘short’ China and India.  Rather, they should rely on the expertise of experience professionals.  If you are learning this in the financial media, it is likely that fund managers are one or two steps ahead (and will remain so).

One last point:  Because the opportunities for skilled fund managers to exploit these highly-fluid country valuations are rampant, their active management is likely to produce better results than a mostly fixed allocation which an ETF or close-end fund offers.

Bottom Line:  Stick to the experts in trying to get the  most bang for your BRIC.

By Kurt Kasun

A contributing writer to GreenFaucet.com , Kurt Kasun writes a high-end investment timing service, GlobalMacro, which is focused on identifying opportunities that produce returns in excess of market with reasonable risk. He is strategically located in Washington , D.C. , a key to maintaining contacts and relationships which help Kurt understand global policy and economic factors as they emerge. His investment approach has always been macro in nature largely due to his undergraduate studies at the U.S. Military Academy at West Point (B. S. National Security, Public Affairs, 1989) and his graduate studies at George Mason University (M.A. International Commerce and Policy, 2006).

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

Kurt Kasun Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments

Leeb Group
28 Jul 09, 14:55
BRIC Investing

Investors seeking BRIC exposure can also look to companies with stakes in emerging economies to outperform the market over the coming years. A company need not be headquartered in an emerging market to benefit from the rapid growth that countries like China and India are experiencing in the face a global economic slump. Intel, Coca Cola, and Procter & Gamble are all examples of multinational firms that have exceeded expectations on the back of their significant business ventures in emerging markets. While actively managed mutual funds may fit the bill for BRIC investing, well chosen equities can provide excellent returns as well. –www.leeb.com


Post Comment

Only logged in users are allowed to post comments. Register/ Log in