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Your Money > Savings Articles > High of the...
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By Richard J Hunter
While the developed markets have been past a quarter which they would rather forget, so the emerging markets have had a much less torrid time. Traditionally, there are reasons for this - for example, as often as not the "story" in these growing countries is commodity related and so this demand helps pull them past market jitters. In addition, as a rule, they tend to be less (personally) in debt at the consumer level, and so the fallout from the US sub prime markets is less of an issue for them. Quite apart from the big four emerging markets, collectively known as BRIC (comprising Brazil, Russia, India and China), some of the world's fastest growing economies (and markets) can be found in places as diverse as Vietnam, Dubai, Venezuela, Qatar, Peru, Indonesia and Thailand. For the investor, there are a number of ways to be a part of this growth - for example, there are a multitude of funds which specialise in emerging markets, either in specific countries or with a more broad brush approach. In terms of UK shares, there are a number of companies which are so diversified globally that they do not need to rely solely on the state of the US or UK economies to remain profitable, on the basis that they have exposure to economies at completely different stages of development, where growth is still at a relatively early stage. By way of example, what type of company has this exposure and is also currently well regarded at the moment? Standard Chartered provides banking and other financial services to both retail and corporate customers. It has 950 locations in more than 50 countries, and employs some 38 000 people. It is generally regarded as one of the more obvious Asian "plays" and the fact that it is so long established in those regions gives it an advantage over others who are attempting to establish themselves. This is a stock for which the general view is a cautious buy. Some still associate the Prudential with the door-to-door insurance salesmen who were long their trademark. However, the business today provides financial services in the US, Asia and parts of Europe as well as the UK. Indeed, over 60% of the Prudential's profits now come from overseas. Recent figures showed that the Asian business continued to forge ahead, with new business sales up nearly 50% over the corresponding period last year, and the market consensus weighs in as a buy. Finally, the communications, media and advertising group WPP is another with a global presence. The explosive growth of the internet is a tool which it has used to target the more technology focused emerging nations, which account for around 20% of its sales. The aim of the company is eventually arrive at a situation where its revenues are split evenly between Europe, North America and the emerging economies. One off events such as the Beijing Olympics in 2008 should provide further impetus and the market view is currently a strong buy. As time goes on, it is likely that "pure" investments into these emerging markets will start to form part of an investor portfolio in their own right. In the meantime, there is always more than one way to ensure that an investor can at least ride the wave, even if the early explosive growth is unlikely to be maintained. In the bigger of the emerging economies, that time seems some way off yet. Useful links: |
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