BRICs Are So 2000: Care for a MINT?

NEW YORK (TheStreet) -- Jim O'Neill, then with Goldman Sachs (GS), famously called Brazil, Russia, India and China the BRICs in 2001, and those who followed him into those economies were richly rewarded.

Buying into developing economies is like buying technology stocks. You want to get in early, ride the adoption curve, and get out when the crowd moves in. The risks are high, and so are the rewards.

But the BRICs are so last decade.

Instead O'Neill, now an honorary professor at the University of Manchester and a Bloomberg columnist, has a new acronym for investors: MINT. It stands for Mexico, Indonesia, Nigeria and Turkey. These are the countries to watch for the next decade, he argues. All are young in an aging world, and they all have interesting economic prospects.

Not all of O'Neill's calls are consistent winners. O'Neill writes that Russia's growth is already slowing, while China's is continuing, and Brazil's GDP growth is now below that of the U.S. But if you bought a Brazil ETF such as the iShares MSCI Brazil Index  (EWZ) a decade ago, you have more than doubled your money.


The iShares ETF for Mexico is traded as (EWW), and that's the sound investors have been making about it for the last year, when it has fallen nearly 16%.

But Mexico has a median age of 26, a full decade younger than the U.S.'s, which is 37. That means there's great human capital potential in Mexico.

The World Bank estimates Mexico's GDP grew almost 3.9% in 2012. Mexico, not the U.S., is the home of the world's richest man, Carlos Slim. Growth slowed to just 1% in 2013 but is now expected to pick up, thanks in part to its role as a low-wage manufacturing hub for the U.S.

O'Neill has been quoted as saying Mexico's economy has "a perfect storm of benefits" but that doesn't mean things are great. Many workers remain in the underground, untaxed economy. The country is made dangerous by a drug war over exports of cocaine, heroin and other drugs to the U.S.


The iShares ETF for Indonesia is traded as (EIDO). It only began trading in 2010 and is highly volatile. It's currently less than 10% above its initial offering price, but it traded as high as $35 last year. The current price is less than $24.

The median age in Indonesia is less than 29, and the country has 251 million people, making it the most populous country in the Muslim world. GDP growth accelerated in the fourth quarter to an annual rate of 5.7%, which was its slowest pace in five years. But total 2012 GDP of $878 billion was less than Mexico's $1.18 trillion and was spread over nearly twice as many people.

Indonesia has a functioning democracy, with inflation of 8% last year. Indonesia exports both oil and food, and the current accounts deficit has been easing lately. It could become China's Mexico, and manufacturing in Indonesia is now 24% of GDP. 


The Global X ETF for Nigeria, (NGE), only began trading last year, and shares since have moved in a fairly narrow range between $14-16. It's presently at about $14.86.

Nigeria may be one of O'Neill's most controversial calls, because the country is far from stable. It faces conflicts around its southeastern oil fields and in the north, from Muslim terrorists. But the median age is just 18, it has 168 million people, and its GDP of $262 billion was up almost 10% from a year earlier. 

Nigeria badly needs to diversify away from oil, but the ongoing civil conflict in the north makes that hard. Nigeria is also notoriously corrupt, ranking 144 out of 177 nations followed by -- down from 139 a year before -- but somehow it manages to have a functional democracy.

By changing the base used to calculate the size of its economy, morever, that GDP could be calculated as high as $432 billion, making it the largest economy in Africa. And GDP should be even higher in 2014.


The iShares MSCI ETF for Turkey, traded as (TUR), has been around since 2008 and is currently 8.5% below its original level. The country made world headlines recently with a "shock and awe" rate hike aimed at stabilizing the currency, the lira.

Turkey had a GDP of $789 billion in 2012, spread over 74 million people with a median age of about 30. That makes it the youngest country in "Europe" -- a small corner of the country lies in Europe. 

The current view of Turkey's economy is negative, although some see hope that the recent action of the central bank, in defying the wishes of Prime Minister Tayyip Erdogan, may prove decisive. Erdogan has matched that action with a purge of police alleged to be corrupt.

Both these moves are said to be bullish.

Buy Now?

None of the MINT economies is a slam-dunk winner. O'Neill based his calls on high-level talks with economic and political elites. It's a 30,000 foot view, a long term call.

Personally I agree with his call on Mexico. America would benefit enormously from a more stable, more prosperous Mexico, so maybe that's wishful thinking. I also like Indonesia, because its proximity to Asian markets and Asian capital could easily make it Asia's Mexico.

Turkey could go either one of two ways, depending on whether its governments continue to turn toward Europe or toward the more volatile Middle East. And Nigeria? I'm still waiting for my Nigerian prince to send me that money he promised -- I'd rather invest in Ghana, which has a more stable government.

But extreme poverty has been on the decline throughout this century, according to the World Bank, with more people entering the global middle class than at any similar time in the world's history. Where half the world's people were in extreme poverty in 1981, today only one-fifth are.

The BRIC countries have led this. Who is not to say the MINT countries won't follow? In 2025 will we need a new acronym?

At the time of publication, Blankenhorn had no positions in stocks and ETFs mentioned.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

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