Thursday, 14 February 2013

Chinese Investors Encourage Growth in Emerging Markets

Private investors are set to dispense more money into emerging market countries this year as their economies grow intensely and interest rates in developed markets remain low. Though it is much harder for countries to make the transition from emerging to developed economies than commonly thought, only 13 countries have moved from upper middle to high income, (one of the measures of a developed economy) since 1960, according to the World Bank. Of those, five are the Asian tigers; others include Greece, Ireland, Spain and Israel. The world is in for a new change, as we wait for the anticipated boom. Essentially, emerging markets will drive this boom.

Emerging markets will account for the biggest change in the coming future. Developed nations will remain motionless as less-developed nations continue to grow. In 2013, global growth will be a difficult climb but is projected to reach 3.5%; with emerging markets providing much of that boost. When considering the investment potential of emerging market classes, it is clear that they are open for business and more and more investors are seeking access to emerging markets, in hopes of increasing the value of their investment holdings. If growth is the objective, it may be captured better in the early stages by investing in the currency or government bond market, first hard currency then local, rather than equities.

Emerging economies cannot grow in isolation. Economies grow alongside one another. By relying on only one economy, growth is likely to remain static. By relying on a pool of resources in other economies, countries can become independent and determine their own positioning through competitiveness. China, an importing and exporting powerhouse, works in symbiosis with other emerging economies; to assist in the efficient flow of transporting goods. If an emerging economy expects to succeed in the competitive global trade industry, they must work in collaboration with countries like China, and other global leaders within the shipping industry; to get their goods to international consumers.

Investments are being made within broad emerging markets as well as specific and tactical with individual countries. The pace of China’s economic growth will influence numerous trends over coming years. This pace also affects the growth rate of many other emerging markets that do business with China. Analysts believe this growth, should help emerging market stocks outperform their U.S. counterparts and provide alternatives for confused investors, who have grown apprehensive of western markets.


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