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Emerging Markets Guide

 

Introduction

The term emerging markets is used to describe nations whose economic, social or business activity is in the process of development - often rapid - moving from a closed economy towards a more efficient open market infrastructure, while building accountability and transparency into the system.

It is sometimes loosely used as a replacement for 'emerging economies', which are defined as economies with low to middle per capita income. Such countries constitute approximately 80 per cent of the global population and represent about 20 per cent of the world’s economies.

The term was coined in the 1980s by Antoine W. Van Agtmael of the International Finance Corporation of the World Bank. Currently, there are approximately 28 emerging markets in the world. Countries that fall into this category range from very big to very small and are usually considered emerging because of their developments and reforms. The economies of China and India are considered to be by far the two largest of these.


Which Countries are classed as Emerging?
As of April 2009, MCSI Barra –the provider of equity, fixed income and hedge fund indices – classified the following 22 countries as emerging:

  • Brazil
  • Chile
  • China
  • Colombia
  • Czech Republic
  • Egypt
  • Hungary
  • India
  • Indonesia
  • Israel
  • Malaysia
  • Mexico
  • Morocco
  • Peru
  • Philippines
  • Poland
  • Russia
  • South Africa
  • South Korea
  • Taiwan
  • Thailand
  • Turkey

In recent years, new terms have emerged to describe sub-groups of the largest developing countries such as BRIC which stands for Brazil, China, India and Russia, along with BRICS (BRIC + South Africa), BRICM (BRIC + Mexico) and BRICK (BRIC + South Korea). These countries do not share much between them in character apart from their high rates of GDP growth, but some experts believe that they are enjoying an increasing role in the world economy; in grouping them together in an investment proposition, management groups are betting that they have cherry-picked a basket of the fastest-growing opportunities in the world.

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