Emerging countries have appeared to cool off over the last few months as the once-abounding buzz about developing markets has died down. Between the tapering of quantitative easing and the prospective rise of interest rates across the globe, it hasn’t been the best time to have your money in emerging markets.
The problem has only been compounded by fears that currencies such as the Indian Rupee and the Indonesian Rupiah may continue to lose value. With the American Federal Reserve now projected to begin scaling back on quantitative easing in March of next year, there may be some time before the flow of cheap dollars to emerging countries is cut off, but one thing is for sure: the end will come eventually.
This has left investors in emerging countries with a tough decision; should they pull their money out, compounding fears of capital flight, or should they stick the course and try to capitalize on a potential rebound in growth rates over the coming year? Especially with economic growth forecasts being trimmed by several international groups over the past months for emerging countries, the choice is by no means an easy one. According to the International Investing Forum, not all emerging markets are created equal. Some have adopted macro-level policies that will prove favorable over the coming years, while others have not. Among the factors considered are debt levels, spending ratios, and currency positioning. Let’s take a closer look at their list of the top 6 emerging countries for investors.
First up, we check in with Mexico, a country that may seem at first to be weak because of its anemic growth rates for this year. While it is true that Mexico has not been immune from the setbacks in economic growth that have plagued developing countries, it has a lot else going for it. The peso does not carry some of the risk as other currencies, given its relationship with the dollar; the country has kept its debt levels relatively low; and to top things off, it maintains a favorable climate for many businesses.
Next up, we shift our focus to Thailand, a country that is often included in lists of the top Asian emerging economies. Though the country was at the heart of the financial crisis in the late 1990s, the country has come a long way from when floating that baht sent ripples through the economies of countries throughout east Asia. Now, the country is seen as one of the safer investments in the region, especially compared to countries such as Indonesia and India.
The next entry on our list is certainly a surprise, as it is a country that wouldn’t come to most peoples’ minds if asked to name emerging countries. Kazakhstan is a country whose economy has performed surprisingly well over the course of the last few years, building off of its exit from the Soviet Union during the 1990s. With substantial industries in oil, gas, mining, and the extraction of minerals, the country’s natural resources have certainly helped on its path to relative prosperity.
Staying in East Asia, we shift our eyes to the Philippines, the victim of a recent devastating storm. Though the country will have to rebuild, it remains a solid pick economically from the perspective of an investor. Despite some infrastructure being wiped out, that means that there will be activity and opportunity in construction and other development in the wake of the disaster.
South Korea is often cited as one of the soundest economies in the region of east Asia. Home to several thriving businesses of all sorts — including several top auto manufacturers — the country has also managed to avoid the trap of borrowing, having some of the lowest debt levels in the area. With the nation impacted less than others in the recent worldwide recession, South Korea is sure to be a solid choice to invest money in the coming years.
The final pick of the investing forum is Russia. Investing in Russia does require a bit of caution; the country recently updated its growth forecasts to be substantially lower than several other key emerging nations. In addition, downward pressure on oil prices could pose a serious threat to the country’s economy. However, if care is exercised, there are still plenty of opportunities to make money in the heart of the former Soviet Union.
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