Investing around the world
Last week we chose which of the BRICs we would live in had we the opportunity and no surprise here, Brazil won hands down.
Sunny, festive, Brazil. From the beaches of Rio to the skyscrapers of Sao Paolo, most cited its booming M&A, IPO market, job security and overall quality of life there over its less sexy sister nations as reasons why we should jump ship and learn Português.
Hmmm, probably missed a few other reasons here but nevertheless, the place is awesome all around.
From an investment standpoint however there has been some sentiment that the BRICs are overplayed. Mind you, had you invested in them when it was coined in ’01 you would have banked real horrorshow returns, but today however, with their rising currencies hurting their exports and what not, the cutter has been moving away from the BRICs and has been looking for growth elsewhere.
Some of that money goes to the n11’s, but would you as well? And which one would you put your money in?
The new 11 emerging nations as Goldman coined 5 years ago are supposedly the “new BRICs” and have economies that could possibly rival the G7 in the future. It’s composed of:
• Bangladesh
• Egypt
• Indonesia
• Iran
• South Korea
• Mexico
• Nigeria
• Pakistan
• Philippines
• Turkey
• Vietnam
Eddie made a great case for Africa last week, and I can make the case for Indo.
I was there three times this year and while you won’t see hundreds of cranes putting up skyscrapers every other block like in any other clichéd boomtown, you could easily viddy why there’s a growing amount of FDI’s there.
While it’s a large exporter of commodities (palm oil, gas, coal) and soon to be the Asian base for large energy and manufacturing companies, it has become a consumer nation over the decade (with the world's 4th largest population), effectively cutting off their reliance on their growing exports.
Add the endless beaches and tourist traps siphoning money from Europe and Australia year in and year out, it looks like a winner.
Bad news is the JCI has been going up forever.
What about the others? Here’s a good vid on Turkey and its prospects.
But can anyone make a good case on why we should put our money in Iran? Mexico?
Which of the 11 would you put your money into?
And if you won’t, where would you invest instead?
Happy holidays WSO.
Indonesia. Its next to Asia, has a large population and a lot of potential IMO in places like Jakarta, etc. South Korea is probably quite good as well.
South Korea for sure. Had the chance to visit Vietnam around 2 months ago, would stay far away from there from an investment standpoint.
Just gotta throw this out there: http://en.wikipedia.org/wiki/Florian%C3%B3polis
See you there.
http://online.wsj.com/article/SB100014240527487038869045760315107224938…
Bangladesh is an interesting place, but the market got far too overheated on the back of the RAK ceramics IPO and is now pretty fully valued. Has started to correct leading to riots in the street etc. Fun place.
Egypt has done alright in the global bounce, again nice demographics and some interesting second tier stocks. It does have a high sensitivity to food price inflation though and there are a couple of potential hiccups on succession and Algeria screwing over large cap orascom telecom.
Indonesia agreed with the above, although the hot money inflows appreciating the currency worry me a tad.
Iran's been a fantastic place to invest over the last few years, up over 100% since 2007 and would be my top pick. Currently on about 7x PE, 12% dividend yield. Loads of resources, young, educated population, completely useless finance system for infrastructure projects thanks to jafari finance not allowing for basic stuff like back to back contracts. I'd hold off investing there for now if you're american though, wait for it to follow libya in moving off the evil terror list after the demands of having to create 2 million jobs a year wins out. About $100bn or so of IPOs in the pipeline too.
I view Mexico as a leveraged play on US consumption, which is likely to be somewhat dicey..
Great post somebody, I've read about the problems with investing in Iran and pretty much didn't give it much thought after that.
I don't think so LIBOR, while South Korea is a more developed economy compared to the BRICs, et al, the way I see it, from a growth perspective they just couldn't compete with the former into the 2000's. Things have been picking up for them though.
It's true; they just had the inaugural Korean Grand Prix. They also make Hyundai's...
Why Iran, though? I would imagine that it is a huge geopolitical risk. Oil and gas reserves perhaps?
I'm' surprised that South Korea is on the list. I've always thought South Korea to be a more advanced economy than the BRICs (not in terms of amount of output but type of output: Korea makes cars, semiconductors, other advanced products). Thoughts on this? Am I mistaken?
Would never put my money in Pakistan, if anything I would short everything to do with it, at least until the government is a lot less corrupt and it stops being a failing state
South Korea just looks strange on that list. If you would have bet on them on the 70s and 80s, you'd have been wildly successful. Since the Asian crisis, they have been experiencing steady but unspectacular growth. That's probably not going to change and it's probably more likely going to be like Japan in the near future.
I think Civets coined by HSBC is a shorter and a better play to me. It includes South Africa and Colombia, both countries with potential scalability when venturing further into their respective continents. I would add Sri Lanka into the list. Colombia has abundant mining and exploration opportunities in addition to oil explorations with viable consolidations. In addition both South Africa and Colombia can also be looked as potential real estate boom in the coming decade with rising middle class in both countries.
I like Sri Lanka as it too is coming out of long civil war.
I maybe wrong on this, but wasn´t Peru and Sri lanka´s respective stock markets which roofed this year? Maybe someone can comment on this and how to go about investing in these respective countries as an individual equity investor and not institutional investor. Cheers.
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