Investors hear it all the time: Developing markets represent an enormous risk. Whether it is a nation's transparency or lack thereof, imperfect accounting standards, unstable currencies or high inflation, it seems there has always been a reason to forgo investing in such markets.
As the U.S. economy slips into the early stages of recession, many investors are seeking to place their capital abroad and have turned to what I like to call the "six sizzling markets": Brazil, China, India, Mexico, Russia and South Korea. (See the book Six Sizzling Markets: How to Profit From Investing in Brazil, Russia, India, China, South Korea and Mexico)
Achieving growth nearing double digits in some instances, these emerging economies are ripe with favorable conditions -- whether demographics, infrastructure or an abundance of natural resources -- that have historically proven to be the catalyst for consistent economic expansion.Though the United States remains the world's richest economy, it isn't the fastest growing; its gross domestic product typically expands by 2% to 3% a year. China is a comet by comparison, with GDP typically growing by 8% to 10% annually. Goldman Sachs suggests that by 2040, the GDPs of Brazil, Russia, India and China, a group known as BRIC, could exceed the GDPs of the United States, Japan, Germany, France, the United Kingdom and Italy combined. Natural and Human Resources Key factors that will support this growth include huge reserves of natural resources (Brazil, Mexico and Russia) for export markets and a large and well-qualified work force (particularly in India and China) with relatively low wage levels. Korea's economy will also grow, as its more advanced industries will benefit from increased trade with China.