Date updated:10-30-2008
Building Profits, BRIC by BRIC
While the BRIC countries are by no means the world’s only attractive emerging markets - from time to time, in fact, the BRIC markets may become overpriced or their growth prospects may ebb - over the long haul, these markets remain strong opportunities for investors, and should remain at the top of your list of profit plays. Here are the four top factors why this is true.
* Population: The four BRIC markets are the largest economies and have some of the largest populations among emerging-market countries (which don’t include such already-emerged East Asian markets as Japan and South Korea). Companies from BRIC countries have large-and-competitive domestic markets, meaning they’re already globally competitive when they venture abroad.
* Rapid Growth: China and India have two of the fastest growth rates in the world, and that looks likely to continue. Other rapidly growing countries are much smaller - and more risky.
* Natural Resources: While China and India are the major poles of global manufacturing and service growth, the two other BRICs - Brazil and Russia - are cornucopia of commodities and energy, which in the past have been inadequately exploited. The escalating energy and commodity prices of the last five years have brought rapid growth to both countries, enabling them to develop active consumer sectors with a multitude of investable companies.
* Access to Capital: Brazil recently achieved an investment grade debt rating from Standard and Poor’s Inc., giving the Latin American country access to the major global pools of institutional capital, while also significantly lowering the cost of its debt. Russia has built up foreign-exchange reserves of more than $400 billion, allowing it to break free of a reliance on foreign capital. China, with a record $1.68 trillion of foreign exchange reserves, has access to all the capital it can handle. Finally, India may finally have broken out of the cycle of foreign exchange constraints that had previously prevented rapid growth: With foreign capital of almost $300 billion invested in its stock market, it is very much on investors’ radar screens worldwide.
Special Report: Hit the BRICs for a Global-Investing Double Play
Special Report: Hit the BRICs for a Global-Investing Double Play Part 2

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