Why Emerging Markets Are Attractive
NEW YORK (TheStreet) -- As the global economy starts to shows signs of improvement, many analysts believe that emerging markets will be the place to be, and for good reason.
As these nations build infrastructure, and their consumer spending increases, emerging economies often expand faster than their developed counterparts. In 2008, the gross domestic product of both China and Brazil grew more than 7% compared with just 1.1% for the United States. Much of this growth was fueled by building and improving infrastructure and the relatively low amount of consumer debt found in these nations, which enabled them to expand faster than their developed counterparts.
Economists expect these nations to continue to grow, which could further create opportunities for strong corporate profit growth, and in turn appreciation in stocks. However, one must keep in mind that investing in these nations is riskier than investing in developed countries.
Most emerging economies suffer from unstable political, legal and financial systems, volatile currencies and liquidity issues. In order to help deal with these risks, having an exit strategy is helpful, especially one that triggers price levels at which an uptrend could come to an end. Such data can be found at
.
Some equities that can enable one to gain exposure to emerging markets are the following:
The
iShares MSCI Emerging Markets ETF
(EEM) - Get Report
, which is up 90% from its March low of $19.94 to close at $37.86 on Friday, with a SmartStop of $35.49.
Vanguard Emerging Markets Stock
(VWO) - Get Report
, closing at $37.50 on Friday, up 93% from its March low of $19.41, with a SmartStops of $35.25.
--Written By Kevin Grewal in Laguna Niguel, Calif.
Kevin Grewal is an editorial director and analyst at SmartStops.net where he focuses on mitigating risks and implementing exit strategies to preserve equity. Prior to this, he was an analyst at a small hedge fund where he constructed portfolios dealing with stock lending, exchange-traded funds and alternative investments. He is an expert at dealing with ETFs and holds a bachelor's degree from the University of California along with a MBA from the California State University, Fullerton.
