New World’ Economies Emerging
A recent trend across the spectrum of large, multi-national corporations in the United States and Europe is the emergence of “new world” economies, such as the Chinese economy, for these corporations. These “new world” economies are where growth in consumption is likely to come from, and is therefore where market opportunities lie.Economic growth projections for 2011 are expected to be about 2.2% for the world’s seven largest developed nations, compared with 6.1% in emerging markets (such as China with 8.7%, India with 8.2% and Indonesia with 6.5%).Closer to home, many Australian companies are focusing on emerging markets as a key growth area. If you have visited Vietnam recently will have noticed a rapidly increasing number of ANZ bank ATM’s and branches around the country.Greater populations in countries such as China and India compared to the US, in addition to improving standards of living in these countries is fuelling this demand. Even mode meratol st increases in the proportion of people who can afford to buy more consumer goods will lead to a significant increase in the number of potential customers for Western companies with global ventures operating.For local investors seeking to gain exposure in these emerging economies, we recommend accessing this growth by buying the large multinational industry leaders listed in the US, UK and Europe that have international businesses operating in these markets.They have the ability to take advantage of low funding costs in their home markets, because of historically low interest rates, and are able to re-invest this capital in high growth offshore markets that offer much more attractive returns.Another much lower risk way of accessing emerging markets is to buy big blue chips in developed markets. The transparency of their operations is greater; they have more developed reporting standards, as well as stronger governance and shareholder protections.