By Michael Power of Investec Asset Management
The Brics acronym has captured investors’ imagination like few others. But has it really helped us understand the intrinsic nature of the risks and rewards in the emerging market (EM) asset class, thereby allowing us to profit from investing in it? I have long had my doubts and recent turmoil in the asset class has only confirmed them. So is there a better way of understanding this asset class? My conclusion is that we should move away from the prism of Brics – and indeed some of the other acronyms now flavouring this alphabet soup – and instead think of EMs in terms of blocs.
There is a pressing need to do this: the paradox of investing in EMs is that whilst the structural case for doing so is overwhelming, it remains an asset class that is still both cyclically risky and very volatile. This suggests the right question to ask is no longer “whether” to invest in EMs, but “how”. And in answering this “how”, we must above all acknowledge that not all EMs were born alike. Continue reading »
Emerging market equities look cheap. Andrew Pease, global head of investment strategy at Russell Investments, tells John Authers why it might be unwise to buy until after the Federal Reserve has started to taper off its bond purchases.
Move over BRIC, here comes…MINT?!
Jim O’Neill, the former Goldman Sachs economist who coined and popularised the BRIC concept as an investment thesis, caused quite a stir this week when he talked up the prospects of the “MINT” economies. Continue reading »
By Marcus Svedberg of East Capital
As financial markets started to price in tapering over the summer, it became popular to “RIP the Bric” story in what turned out to be an almost comical coincidence with the departure of the acronym’s founder.
But the financial death of Brazil, Russia, India, China and (sometimes also) South Africa was, of course, exaggerated. Continue reading »
The IMF’s latest World Economic Outlook makes pretty grim reading for emerging markets. The Fund has cut half a percentage point from its projection for overall EM growth for 2013, and 0.4 percentage points off its 2014 forecast – they are now 4.5 and 5.1 per cent, respectively.
And it’s not all China. The big downward revisions for 2013 are India (-1.8 percentage points), Mexico (-1.7), and Russia (-1.0). But the real meat of the IMF’s report is a big section entitled “What Explains the Slowdown in the BRICS?”. The answer isn’t very pretty. Continue reading »
How gloomy should we be feeling about emerging markets? According to HSBC’s Emerging Markets Index, very. The index – a weighted composite of purchasing managers’ indices from 16 countries – has dipped into negative territory for the first time since the crisis of 2008-09.
Worse, the deterioration was increasingly broad-based across the emerging world. But there were some bright spots amid the gloom – reminding us to be careful when thinking about the emerging markets as if they were one homogeneous group. Continue reading »
By Sammy Suzuki of AllianceBernstein
For more than a decade, Brazil, Russia, India and China have dominated conversations about emerging market investments.
But as the BRICs-driven commodities boom wanes, it may be time for investors to rethink their approach to emerging market investing. Continue reading »
By George Hoguet, Global Investment Strategist, State Street Global Advisors
The achievements of the recent Brics summit deserve another look.
Global investors should welcome the proposed $100bn Contingent Reserve Arrangement and the planned Development Bank backed last month by the leaders of Brazil, Russia, India, China and South Africa. The Brics shareholders have yet to work out the details of these institutions, but the political resolve is clearly in place. Continue reading »
The fact that the axis of world energy consumption is moving east isn’t exactly new – but the International Energy Agency is finally responding to the inevitable.
As the FT reported on Thursday, the agency is seeking an association with emerging economies, including the four Bric states. So beyondbrics has put together a couple of charts that show the change in energy consumption – and where it could go in the next two decades. Continue reading »
Jim O’Neill, retiring chairman of Goldman Sachs Asset Management and author of the “Bric” acronym, has no idea what he will do after he clears out his office on London’s Fleet Street in a few weeks.
The candid Mr O’Neill, a Mancunian to his core, mulls the question as if to put the matter to rest. Continue reading »
By Simon Evenett of the University of St Gallen
Every summit has to have a deal and Durban is no different. Publicity-hungry ministers used to initial investment deals, now they sign currency swaps. The Sino-Brazilian currency swap won’t impact day-to-day trade much. Two countries with huge foreign exchange reserves have decided to swap some currency when times are tough.
It’s like two millionaires promising to lend each other ten dollars if they’re temporarily short of cash. Brasília and Beijing are signalling their desire to intensify trade, which is fine but hardly earth shattering. Continue reading »
Imagine a group of five friends who get together to build a holiday house. Only they can’t agree on what it should cost, where to put it or who should pay for it.
This roughly is the position of the leaders of Brazil, Russia, India, China and South Africa as they end their annual Brics summit. Continue reading »
By Shang-Jin Wei of Columbia Business School
The economic collapse of China has been predicted before, notably by a US best seller in 2001, entitled The Coming Collapse of China.
The only problem with that volume of forceful and insightful analysis is that in the ensuing dozen years, China has been the fastest-growing major economy in the world. It didn’t just grow faster in terms of real GDP than most high-income countries, which is not surprising, but also faster than India, Brazil and Russia, its emerging market peers that are routinely lumped together with China as if they were part of a homogenous brick. Continue reading »
By Martyn Davies of Frontier Advisory
After the onset of the (western) financial crisis of 2008, there has been a deep questioning of the free market ideology encapsulated by the phrase “Washington Consensus.”
At least this is the case in Africa. For a while there was debate over whether an emerging “Beijing Consensus” would gain traction and become the developmental compass for the developing world – a model that was “statist” in its approach and inherently distrusting of markets. Continue reading »