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04 July 2023 11h45
Source: Banco Carregosa

6 Emerging Economies You Should Know About

6 Emerging Economies You Should Know About
6 Emerging Economies You Should Know About

Investing in emerging markets can offer opportunities for strong returns. Here are 6 examples that are worth looking into.


Although many parts of the world are suffering the consequences of war, inflation and high interest rates, some economies are enjoying a period of rapid economic growth. According to the IMF’s World Economic Outlook, GDP in emerging markets is expected to grow by 3.9% in 2023 and by 4.2% in 2024, which explains the attractiveness and the focus of investors on these markets.

Below, we highlight six of the most attractive and promising emerging markets to consider as a starting point, taking into account Gross Domestic Product (GDP) trends over the last few decades.

1. Indonesia, one of the more fledgling economies


Indonesia, one of the more fledgling economies

Source: CEIC Data

Indonesia is the fourth most populated country in the world. Although the country was hit hard by crises in the early 2000s, it has made a solid and sustained recovery over time, with growth ranging between 3% and 6%.

Some of the top picks for investors include Telkom Indonesia, Kalbe Farma and Unilever Indonesia. ETFs to consider include iShares MSCI Indonesia and the VanEck Indonesia Index.



2. India, a resilient economy


India, a resilient economy

Source: CEIC Data

India's growth is almost as impressive as China's. Despite high poverty rates, the middle class is expected to grow and purchasing power is expected to increase, leading to rapid economic growth.

Some of the more solid stocks include Reliance Industries, Infosys and Britannia Industries. The main ETFs are the iShares MSCI India ETF (INDA), the WisdomTree India Earnings Fund (EPI) and the iShares India 50 ETF (INDY)13.



3. Malaysia, a diversified economy


Malaysia, a diversified economy

Source: CEIC Data

Malaysia is one of the most attractive emerging markets in Asia. The country has experienced growth of between 4% and 6% over the past decade, and the debt-to-GDP ratio is falling. The currency is relatively strong and the economy is quite diversified.

The country offers particularly attractive conditions for investing in ETFs, such as the iShares MSCI Malaysia ETF (EWM), which holds shares of the 41 most valuable companies in 9 sectors.



4. Brazil, a economy rich in natural resources


Brazil, a economy rich in natural resources

Source: CEIC Data

Brazil has survived financial crises, high debt levels, inflation, unemployment and political uncertainty. For several years, the country has maintained its emerging market status, given its vast natural resource wealth and growth potential.

For these reasons, investors focus on the country's exporters, such as Petrobras, Vale or Brasil Foods. It is also possible to invest in the largest Brazilian ETFs, such as the iShares MSCI Brazil Capped ETF (EWZ), the Direxion Daily Brazil Bull 2X Shares (BRZU) or the iShares MSCI Brazil Small-Cap ETF (EWZS).



5. China, the potential of the second largest economy in the world


China, the potential of the second largest economy in the world

Source: CEIC Data

China is already the world's second largest economy, but still retains emerging market status due to the strong growth potential of its middle class. It accounts for almost a third of the MSCI Emerging Markets Index, which tracks nearly 1,400 large- and mid-cap companies in 24 emerging markets, representing around 85% of market value in each country. Despite being the world’s second largest economy, China’s GDP per capita is around USD 12,000, ranking it 64th in the world.

Tech giants such as Alibaba, Tencent and WeChat are well positioned to attract this segment of the population with new-found spending power. In the ETF market, the Global X MSCI China Financials ETF (CHIX), the Global X MSCI China Utilities ETF (CHIU) and the Xtrackers Harvest CSI 500 China-A Shares Small Cap Fund (ASHS) are worth exploring.



6. Chile, a stable economy


Chile, a stable economy

Source: CEIC Data

Chile is considered by many investors to be the most important emerging market in South America. Figures show steady growth of around 3% over the last decade. Despite a growing public debt over the last decade, the debt-to-GDP ratio is still relatively low.

Many investors are considering Enersis and Vina Concha y Toro as investment opportunities, or the ETF iShares MSCI Chile (ECH).

Banco Carregosa and the emerging markets

There are other emerging markets to consider, but these six can be a good starting point. However, it is important to remember that this type of investment also carries risk, which is why a conservative allocation of between 5% and 10% of the investment portfolio is recommended. As with any portfolio, diversification is key. You can count on the experience and knowledge of the Banco Carregosa team of experts to make the investment decisions that best suit your profile, while protecting your assets, knowing that they are in safe hands.