Unfortunately, There's an "I" in BRIC (and a "C") 23 comments
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"Give me a BRIC...hold the I and the C" is an order many BRIC investors would have loved to have made over the last six months. While BRIC (Brazil, Russia, India, China) has a huge investor following, India and China have done nothing but go down over the last half year.
As shown in the chart below, Brazil is up 9% and Russia is up 7% since early December, while India is down 21% and China is down 31%. If things don't begin to turn around for the two laggards soon, we'll probably start seeing just "Brussia" ETFs.
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This article has 23 comments:
At present, the growth is Brussia is based on Energy and Materials (applies only to Brazil). As the oil bubble breaks, these stocks would experience tremendous pressure. In addition, these Brussia stocks are having a ball right now which is because of weak dollar. Once the dollar becomes strong these stocks would be under pressure. Along with this hyper-growth, they are also having rising inflation.
What does this mean to Chindia? They are experiencing the same cost pressure escalation that US is experiencing. The stock market is undergoing a much-needed correction. As the oil price stabilizes, there would be more stability in the stocks. If the dollar appreciates, that would benefit these economies.
The Chinese economy is totally dependent on US market. So when dollar appreciates, it affects Chinese stocks. Indian software imports and BPO service markets are experiencing tremendous pressure because of weak dollar. The long-term picture for these 2 countries are still very healthy and GDP growth is well over 8%.
Consumption within these economies are going to grow tremendous which is going to spur more growth in these markets. Bernake has already mentioned the need for a stronger dollar. Once this happens, the pendulum would be shifting towards China & India.
While infrastructure growth has been tremendous in China, India offers a huge opportunity for massive improvements in infrastructure. Once there are more infrastructure boom begins, it would generate an additional 2% of GDP which would be in addition to 7% GDP growth. So these 2 markets offer compelling value proposition
So you cannot stay away from these economies. This would be a good time to take position in these markets. As oil bubble burst, you want to transition from Brussia to Chindia until there is a correction in Brussia.
What the chart tells me, however is that Russia and Brazil are rolling over.
Thx jegan ;-)
I love Bespoke graphs. Those who don't like facts can read opinions of so called experts. Bespoke reports facts.
Make your own conclusions!
I think the long-term outlook for this country is much better than many people think. The recent problems that BP (among others) has had indicate that if a joint partnership goes sour, the Russian government and legal system will only support the "home team." Make no mistake, that's a serious problem for any country hoping for foreign investments.
But, Russia is a much more capitalistic and free place than western (American) newspapers lead us to believe. I have a son living in St. Petersburg, and he knows all about all of the various protests and controversies with respect to human rights etc. He knows about them because he read about them in the local papers and on the freely available Internet. Those are Russian language papers. The population reads those papers, surfs the Internet, and openly discusses all issues.
That's way different from the Soviet Union, and way different from China or Saudi Arabia today.
Clearly there are risks, as in any emerging economy, but don't be fooled into thinking this country is going to slide back into Soviet style totalitarianism. There are millions of well informed people living there who would, literally, give their lives to prevent this from happening.
After 18 years working for banks (mostly Swiss), I understood one thing very clearly ; banks are experts at marketing.
If you travel to Brazil, you will quickly find out that it has nothing to do with China or India .....
But the marketeers .......have to sell you something "fashionable".
Now the marketeers came out with "Frontier markets" .......
Focus on country selection.
If you are long oil ; then Brazil and Russia make sense.
If you are long gold , then a south African index is the way to do it.
As for your so called "mean-spirited" remarks, perhaps if more readers were equally candid, worthless articles like this one would be replaced with meaningful information. After all, doing research on the web is time consuming and this article was a waste of time to write and read.
Thus as you can see, Albert Meyer (posted above), arkay's remarks have not in any way scuddled meaningful discussion. As Jim Cramer points out, this game is about making money, not friends and arkay has made a beneficial contribution to all readers to that end. Thanks again, arkay