Monday February 25, 2013
by Jim Powell, editor Global Changes & Opportunities
Although I am not recommending that you make large investments in emerging nations, several of my picks are in countries and regions that are much less stable than the U.S. and present investors with greater risk.
However, I’ve learned that in many chaotic but fast growing countries, companies often find ways to be profitable – sometimes very profitable. I think you should share in their success. Here's a look at opportunities in Turkey, Indonesia and the Africa & Middle East regions.
I first recommended Turkey in August 2010 when the country’s bid to become a full member of the European Union was rejected. I was convinced that the decision was fortunate because the EU and the euro were starting to look shaky.
In addition, the rejection caused Turkey to focus once again on its greatest asset – serving as a bridge between Europe and the Middle East. Turkey is also expanding its commercial opportunities in Africa, which should have a big payoff longer term.5
In the three years since, Turkey has become the 18th largest economy in the world. Those who do have positions in Turkey stand to make excellent long-term profits as the country continues to develop. I continue to recommends the iShares Turkey ETF (TUR).
Meanwhile, growth in sub-Saharan Africa has averaged 5.4% annually over the past five years vs. only 0.8% for the U.S. and a recession in Europe. In 2012, four of the 10 fastest-growing countries in the world were African.
Africa is still in the early stages of its development, and the way ahead will be rocky. However, Africa may ultimately deliver the best gains of our careers. With Africa, investors must diversity to capture growth that varies widely from country to country.
You must also diversity to minimize risk. The easiest way to take a broad position is to buy a mutual fund or an ETF, such as Market Vectors Africa (AFK), SPDR S&P Emerging Middle East & Africa (GAF), and T. Rowe Price Africa & Middle East (TRAMX)
One developing country that is starting to look very promising is Indonesia, which is likely to become one of the world’s great growth stories.
Indeed, Indonesia reminds me of China 20 years ago when its economy was starting to emerge, but before growth began to shoot up.
Indonesia has no shortage of problems. Like China, Indonesia has a heavy-handed government that is corrupt. Among the country’s 230 million people, some are very wealthy and others are desperately poor.
However, the country also has one of the most ambitious populations in Asia that is transforming the country into a commercial and industrial powerhouse. Indonesia’s major cities are as modern as any in the world, and they are growing rapidly.
Indonesia has abundant natural resources that it is using to support its growth. The country is developing a strong manufacturing base that includes many advanced technology companies.
Exports are rising, but the country also has a growing middle class and a strong domestic market. Thanks to its internal consumption, when the global economy fell into recession in 2008, Indonesia still grew 4.5%.
Indonesia’s annual growth rate is currently 6.2%, one of the fastest in the world. For investors, I believe the best way to profit from Indonesia’s success is through the Market Vectors Indonesia Index ETF (IDX).
Learn more about this financial newsletter at Jim Powell's Global Changes & Opportunities.