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"Bangladesh, Pakistan and Vietnam boast a combined population of more than 410 million with that demographic profile. We believe this represents a rich opportunity set and that any global investor should want to get exposure to this share of the world’s economy. It is simply a matter of how and when you do it. Relative valuations and growth outlooks make now a propitious moment to build an exposure. "
Reply to @MaxBialystock: Opportunity does not always turn into profit. India is at the edge of being the first BRIC nation to be downgraded to Junk rating status.
Reply to @Investor: The fight between Vodafone (the biggest corporate overseas investor in India) and India over taxes from a prior transaction (when Vodafone bought the Indian business from another company) does not look all that good from a foreign investment standpoint, either.
I still want to have EM exposure for the long-term and didn't expect the story to be a smooth ride. India, however, seems to be going through a particularly difficult period.
I have watched the EM economies for more than 20 years, and have noted there have always been suggestions that these countries were in some way "losing it", as the article puts forth again. I can remember the same talk even before Russia, China, India, and Brazil became economic forces. Then it was how risky it was to invest in South Korea (now just called Korea by the mainstream), Taiwan, Indonesia, Mexico, etc. In 1997, EUROX came to market. I remember sitting in a room with someone from U.S. Global talking about this innovative, new fund, and thinking how much risk there might be investing in Poland, Hungary, and other parts of Eastern Europe. They were not even considered EM economies; they were called Frontier Economies - sort of like Bangladesh, Egypt, and Cambodia are now. The fund owned a lot of Eastern European banks - very risky - right?
Anyone who has owned EM stocks over the last 15 years knows it has been a wild ride, and EMs will probably always be that way. I read an interesting comment by commentator Greg Valliere yesterday about China: "Don't worry about China. The Chinese could have a rocky time with Mitt Romney, but at the end of the day, pragmatism will prevail. The Chinese government will stimulate whenever necessary, and their economic growth will continue to be the envy of the world. Would China ever pull out of the U.S. debt market? Of course not -- why would they want to damage their own portfolio?" In the end, China, Russia, and the other large economies with governments that control most things have to grow their economies. The demographics of their growing middle classes demand it.
I don't look at the BRIC nations as real EMs anymore. They are sort of in between the developed world and the true EMs of the world that are sometimes called Frontier countries. Their will always be risk investing "overseas", but my guess is that 15-20 years from now, the landscape of EMs will have evolved once more.
Comments
http://quote.morningstar.com/fund/f.aspx?t=sfgix
"Vodafone, the largest mobile operator in the world, has grown quickly since entering India, but its five-year, $2.2 billion tax battle has come to symbolize the perils foreign firms face doing business in the country."
http://www.reuters.com/article/2012/05/22/us-vodafone-india-idUSBRE84L0ZT20120522
India frustrations send some foreign firms packing: http://www.reuters.com/article/2012/06/08/us-india-investment-exits-idUSBRE8570XV20120608
I still want to have EM exposure for the long-term and didn't expect the story to be a smooth ride. India, however, seems to be going through a particularly difficult period.
EEM broad EM etf vs EPI India ETF:
http://finance.yahoo.com/echarts?s=EPI+Interactive#symbol=epi;range=2y;compare=eem;indicator=volume;charttype=area;crosshair=on;ohlcvalues=0;logscale=off;source=undefined;
Maybe a buying opportunity for those interested, or just an example of why broad EM exposure is best.
Anyone who has owned EM stocks over the last 15 years knows it has been a wild ride, and EMs will probably always be that way. I read an interesting comment by commentator Greg Valliere yesterday about China: "Don't worry about China. The Chinese could have a rocky time with Mitt Romney, but at the end of the day, pragmatism will prevail. The Chinese government will stimulate whenever necessary, and their economic growth will continue to be the envy of the world. Would China ever pull out of the U.S. debt market? Of course not -- why would they want to damage their own portfolio?" In the end, China, Russia, and the other large economies with governments that control most things have to grow their economies. The demographics of their growing middle classes demand it.
I don't look at the BRIC nations as real EMs anymore. They are sort of in between the developed world and the true EMs of the world that are sometimes called Frontier countries. Their will always be risk investing "overseas", but my guess is that 15-20 years from now, the landscape of EMs will have evolved once more.