Emerging economies or the rapidly developing economies as they are more popularly known are the investment flavor of the decade. What makes them so attractive a destination for investment?
The emerging economies are marked by high and sustainable GDP growth rate coupled with increasing opportunities available for investments. Much of this growth is fuelled by internal consumption across various sphere of economy like infrastructure, manufacturing, services and agriculture.
The now famous BRIC report was one of the first researched papers on emerging markets. The report is abbreviated after the four emerging markets in the world – Brazil, Russia, India and China.
The International Business Report has also suggested Pakistan, Turkey, Mexico and Indonesia as the other emerging markets of the world.
The sectors to watch out for in these markets:
- Construction and Infrastructure
- Health Services
- Banking and Finance
- Retail Merchandising
- TCE – Telecom, Communication, Entertainment
All of such investments in emerging markets must be on a time horizon of 5-10 years. The lock in period is necessary in order to surpass the gestation period typical of high value projects and investments. In an emerging economy the benefits accrue only when your investment is for a longer period. This is because, in the initial years, much of the money flows into the economy as capital investments required to create a platform for building further scales. It is only after the first few years that the investment bears fruit and returns start to materialize.
The long term fundamentals of these emerging economies are strong and most of them are not as susceptible to the global trends as the other markets. (Complete immunity is ruled out).