Themes: BRICS, International Investment, International Economies
You should keep an eye on developing nations. The BRICs (Brazil, Russia, India and China) have been on a remarkable run so far this year.
Here’s the tally: the Shanghai Composite is up by over 80%, India’s Sensex has surged by 54% while Russia’s RTS Index follows close behind. Brazil’s Bovespa has paced itself, climbing steadily by 40%.
And how have advanced economies done? They’re down by 6.5%...
The chart below shows the performance of the four markets for the year-to-date. You can see that China leads the pack. Large-scale government spending has pushed the Asian superpower to bounce back with a 7.9% GDP growth for the second quarter.
The BRICs are on a roll, clocking in impressive gains so far this year
Source: Bespoke Investments
The BRICs are a powerful lot. They hold 40% of the world’s currency reserves, make up 25% of global GDP and account for one-third of U.S. debt. We’re certainly seeing ‘decoupling’ here as these nations break away from advanced Western economies.
So here’s the verdict - BRICs are grabbing the baton and running with it, leaving developed peers in the dust. Now for a word of caution - it’s likely that after such a powerful run in global stock markets, we will see a correction. And emerging nations’ equity markets will not be immune.
But once that passes, we see the bullish trend continuing. Get in on the BRICs for a long-term play on their economic growth.
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