Investing in Emerging Markets

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Goldman Sachs BRIC Research

There is much talk today about emerging markets. But, what is the definition of emerging markets, especially as it relates to investing?



One of the best summaries regarding emerging markets information is as follows.

In October 2006, John Authers wrote in Financial Times

What are emerging markets? The term has been with us for a quarter of a century, during which many countries have seen fevered development and in which emerging markets as an asset class have outperformed the developed world.

But with recent successes for emerging markets investing, definitions of the sector have begun to fragment.

At one end of the spectrum, there is the vogue for BRIC (Brazil, Russia, India and China) investing, initially championed five years ago by Goldman Sachs. As far as Goldman is concerned, investing in these disparate countries, singled out for the global influence their size should give them, is not really emerging markets investing. They are too inter-connected with the developed world.

At the other end, there is growing interest in frontier markets so called because it is not even clear they yet deserve to be called emerging. These have the growth potential originally seen in the first emerging markets in the early 1980s, and almost certainly hide bargains because they are under-researched. Hedge funds have taken to scouring through sub-Saharan Africa.

At Atlantic Financial, we define emerging markets as the fast emerging economies - including the second world nations, as well as the rapidly growing economies of the BRICs (Brazil, Russia, India and China. In addition, emerging markets could also include those listed by the FTSE Group: Chile, Colombia,Czech Republic, Egypt, Hungary, Indonesia, Israel, Malaysia, Mexico, Morocco, Peru, Philippines, Poland, South Africa, South Korea, Taiwan, Thailand and Turkey.