Leaping into the world of emerging market countries can have many benefits for ambitious investors. These markets represent rapid growth and high returns. However, investing in an emerging market is not without risk. This article lists the top emerging market countries, as well as their individual opportunities to help you analyze the benefits and risks associated with the investment.
What Are Emerging Market Countries?
The United Kingdom, United States, Germany, and France led the world in industrialization and globalization. For other countries, it’s taken a while to catch up. Emerging markets are rapidly industrializing countries that have decided to trade the simplicity of local business and agricultural systems for expansion into the global market. These countries are usually categorized by rapid growth, low income per capita, new markets, and higher investment returns.
Investing in these emerging economies can come with several benefits, such as diversifying your portfolio and receiving potentially high returns. However, there is some risk involved. Emerging market countries can be fast-paced, volatile environments. While many countries are growing at a staggering rate, others have been affected by changing policies. Also, emerging countries are often subject to chaotic internal influences, such as geographic complications, political feuds, and economic instability.
Despite these factors, many experts agree that now is the time to invest in emerging countries. Credit allocation is highly favorable. In addition, the United States is taking steps toward domestic trade, causing insecurity in the global market and lower investment prices.
Top 7 Emerging Market Countries and Affiliated Opportunities
BRICS represents five emerging market countries: Brazil, Russia, India, China, and South Africa. China is the powerhouse that leads them all. China’s GDP reaches just over 11 trillion, making it the undisputed wealthiest emerging country in the world. Despite recent downturns, investing in the Chinese market is a relatively stable choice.
However, China’s growth appears to be slowing and the time for rapid returns is almost over. Some experts believe this is due to the U.S.’s stringent policies toward Chinese trade, such as America’s First plan. Growth may also be slowing from a shrinking workforce and an industrialization plateau.
Formerly the victim of a staggering recession and political corruption, Brazil’s future is looking brighter. Investor-friendly President Michel Temer has implemented new agreements that instill confidence in global trade. Despite current troubles, Brazil is expected to continue to grow as it moves further away from recession and develops its workforce.
Still, opportunities in Brazil are not without risk. Brazil’s main investment concern is its potential to downgrade due to an inadequate pension reform.
Even as a powerhouse nation, Russia has had many struggles globalizing. This emerging market has decreased and plateaued but could have a surprising opportunity in the future. A few months ago, specialists stated that Russia’s economy will stall, due to U.S. sanctions and stagnant oil prices. With recent favorable political negotiations, investors are once again eyeing this emerging country. Also, the Russian ruble has fallen, making it an easy buy-in for potential investors.
As with most emerging market countries, investing is in Russia is not without risk. While there is potential for additional returns, many still fear the country’s possible stagnant economy and chaotic political climates.
China and India combined accounted for 40% of the emerging market growth. However, India continues to instill opportunity with investors. Where growth seems to be slowing in China, India is relatively constant. In addition, the Indian government is taking steps to stimulate growth with new policies, and continued ease of business is attracting corporate investors. India’s emerging middle-class market ensures a relatively stable economy despite current global market drawbacks.
5. South Africa
The final emerging market country associated with BRICS is South Africa. The South African market has been sluggish, with a predicted growth of only 1.3%. This is partially because the population is still in poverty and consumer growth seems to have plateaued. Government stimulus plans are in motion, however. If these plans work, there could be an opportunity for investment in consumer-related sectors, such as retail, food, and technology.
Mexico has taken quite a hit in recent months. In 2013, Mexico began the quest to reform their entire energy sector. This made the country an extremely appealing investment to the global market.
Recently, Mexico’s oil and auto sector has suffered under the new protectionism policies of the Trump administration. The turbulent political climate has disrupted the confidence of many investors and driven the value of the Peso down.
However, this also creates a unique investment opportunity. With the Peso weakened, Mexican stocks are very affordable. Some experts believe that trade will spring back just as strongly as before and create a very profitable return for those that choose to invest now.
Originally a volatile emerging market country, Indonesia has experienced steady growth in recent years. Indonesia’s consistently strong rupiah, inflation rates, and favorable working population continues to entice foreign investors. Unlike China and Russia, where many fear production has stabilized, Indonesia has plenty of room to grow. Finally, Indonesia’s growth during the global recession is quite impressive and gives investors more confidence. Although some people associate investing in Indonesia with overcoming risks, this country’s trends are very promising.
Investing in emerging market countries is not a get-rich-quick scheme; emerging markets represent benefits and risks. Countries like China, India, Brazil, and Russia still display signs of steady returns with minimal risk. Emerging markets like Mexico and South Africa may be riskier but could mean higher returns in the future. Finally, Indonesia’s promise of consistent growth encourages additional investment.
Calculating your risks based on current events and growth trends can help you choose which emerging market countries to invest in. If you found this article helpful with your upcoming investments, share it with your friends to assist with their research.