Experts in the early 1980's firstly used the term “emerging market” to specify investment in developing economies. Emerging markets can include:
- BRIC countries like Brazil, Russia, India and China, are those that had been booming during previous years
Many emerging markets like South Korea, Singapore and Hong Kong have a developed economy and a deep market.
Investing in emerging markets like Southeast Asia allows you to realise significant returns for a relatively tolerable amount risk. Since these economies have not yet matured, one can profit from numerous opportunities to grow its asset base or plan its retirement.
Aside from potential for growth, emerging markets provide various investors with diversification opportunities. Investing globally could help diversify your portfolio by balancing your total risk because economic recession in one region, including Europe, could be offset by expansion in another one.
The region still has room to grow and a lot of companies with a bright future are rushing there because of the government stimulated economic environment. After the last financial crisis, emerging markets recovered rapidly, that is why it attracted many savvy investors to settle their long-term investments.
According to the financial times, since early 2009, the FTSE Emerging All-Cap Equity Index has outperformed the United States, the United Kingdom and all world indices by more than 75%. More over, some experts point that emerging markets became less dependent to developed markets. They derive their dynamism from strong domestic demand and exports. China for instance topped the rankings for worldwide exportations.
Be aware, there are still some risks to consider like political risk, currency risk and foreign exchange before investing.