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BRIC: What's in store for 2010 ?

I am regular reader of Economist - normally my Saturday goes in reading Economist. It gives me good understanding about geo-political and economic issues around the world. This week, it has special coverage on "Brazil takes off". Few weeks back it had similar special coverage on China. I am hoping that they will have one for Russia and India.

Economies and stock markets of BRIC countries are on fire again even though economies of their biggest customers (US, Japan and Europe) are still in slow recovery. At one point last year, everyone thought that BRIC countries economies would bust but governments of these countries have done pretty good job in timely stimulus. Frankly, the way stimulus was handled by China and India was much better than US stimulus since it got economies going quickly. For example, India's plan of offering job to anyone who wants to work in rural India is an excellent idea in such situations. After all, that's what got US out of great depression. I wish Obama would have applied something similar in US - after all US needs scheme like this to get its infrastructure fixed and also help unemployment below 7%.

So now that BRIC countries are on solid footing, what's in store in 2010 ? Here are some macro predictions:

  • GDP Growth: China: 9%, India: 7%: Brazil: 5-6% and Russia: 4-5%
  • Stock market index growth by end of 2010: China: 20%, India: 15%, Brazil: 15-20%, Russia: difficult to predict but could be around 10-20%
  • Generally stable governments in all 4 countries
What are the vehicles to invest in BRIC countries:
  • Personally I invest in VEIEX which not only covers BRIC countries but overall emerging markets. It is up by more than 70% this year and could rise another 20% by end of 2010. Wait for markets to shake up little bit and invest at regular periods like every month or every quarter so you can cost-average. As always, Vanguard has low expense ratios which help
  • There are other country specific funds like MCHFX, MINDX, FLATX but they are risky due to one country focus
  • I could recommend quite a few individual stocks like IBN, SLT and so on but again they could be risky. It's better to stay with professional mutual fund managers when it comes to investing in emerging markets
Happy BRICing and have a good week !

/Shyam

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