Things to Consider When Investing in Emerging Economies

Being successful in finding a good investment requires some degree of research, a thorough understanding of your risk tolerance and some strict due diligence. To accomplish this, many investors meet with financial planners and set a course, or strategy, that matches up with their risk acceptance, their goals and their funds. This is a great strategy to follow with all of your traditional investments and investing money into emerging countries is no different. In fact, some would say it is even more important, given that these markets tend to be geographically distant and also have new or no banking regulations in place to regulate outside investment.

Often times (although not in Brazil and China so much) regulations and banking/investment standards are not always done the same way as in known financial marketplaces, such as North America and Europe. These rules and regulations can be both a blessing and curse at the same time if you do not know how to navigate your way through. Therefore it is best to deal with an experienced asset manager, with knowledge of these marketplaces.

For those investors who are unaware, an emerging market is an economy that is up-and-coming and that is growing into a mature economy. Places like China, India and Brazil can all be considered 'emerging' even though China is one of the world's largest economies and will soon surpass the United States (estimated to be in 2016) as the world's largest economy. But the sheer size of the marketplace does not mean that it cannot be considered to be emerging.The fact is that these countries are still developing and need investment to achieve their economic potential.

Aside from China, emerging markets - such as Brazil and India, have large population bases and an economy growing at a very high rate. Often times these markets have a mix of manufacturing and raw natural resources (mining, forestry etc) and are predicted to continue growing well into the future. Moreover, given that emerging countries will account for almost 70 percent of world economic growth in the next half-a-decade, there are many great investment experiences to be had.

Dubai Strengthens Economic And Investment Ties With China

China, which currently serves as the locomotive of world trade and the world's second largest economy, is continuing to strengthen economic and investment ties with the United Arab Emirates (UAE), specifically in Dubai. The Dubai Economic Council (DEC) is seeking to heavily deepen the partnership between Dubai and China by proposing mechanisms and policies and communicating with the various economic departments in China. China, being a world-leading economy and the UAE, an emerging market within the global economy are both looking to continue boosting their respective economies by creating stronger investment partnerships.

Over the years, Dubai has managed to prove itself as a regional, global trade hub providing state of the art logistics, in addition to its modern infrastructure and extensive network. This extensive network includes shipping lines and transport with the highest international standards, making it an appealing market for investors from all over the world. In addition, Dubai also has strong bilateral business relationships with a number of different countries, from the east and the west, but the relationship with China is of special strategic significance beyond the tradition to affect vital areas such as energy, industry and infrastructure, including a number of strategic projects in the pipeline by major Chinese companies. The Government of China is supporting the creation and development of several projects in the Emirates. These include: tourism, industry and retail in addition to recycling.

With these two major Asian economies on the rise and building meaningful investment ties, it will be interesting to see how private investors react to the major business and investment opportunities that will emerge in both the Chinese and UAE markets. The UAE will continue to welcome Chinese investment in all areas, focusing on tourism, especially in light of Dubai vision 2020 to develop the tourism sector. The goal is 20 million tourists & AED 300 billion in tourism revenues annually, by 2020.

China And UAE Capitalizing On Global Economic Opportunities

The global economy has doubled in size since the turn of the century. Thanks in large part to the rise of the world’s emerging markets. It is not surprising that many of these emerging markets have had help from foreign investments mainly from the UAE and other Arab Gulf nations and China as well. The two common denominators between the two regions is cash money. Both China and the oil-rich Gulf States have plenty of money reserves to invest and they have not been shy in doling it out.

There’s an old saying that “money talks.” When it comes to the growth of the global economy in the last decade, China and the UAE in particular, have been taking advantage of the growth opportunities and have invested trillions of dollars around the world and have put themselves in a strong position to dictate the direction of world trade in the future. There is no doubt all participants stand to benefit greatly from these massive investments and unfortunately it all comes at the expense of the former global economic leaders, the United States and Western Europe. They are inevitably losing their status as leading global economic superpowers and by the time they right their fiscal financial ships, China and the UAE will have sailed on by on the strength of theirs. A new world economic order is no doubt beginning to take shape and as a result, creating appealing investment opportunities.

As it stands today, China, the UAE and all the other emerging markets are expected to have annual GDP growth rates of between 7-10% in the next five years, whereas the U.S. and the European Union are looking at between 1-2%.  Both western Europe and the U.S. are still struggling to revive their economies ever since their past investment mistakes came back to haunt them starting in 2008. As a result, they only have limited resources on which to build the proper infrastructures in order to be more competitive as the global economy head towards an economic boom by 2020.

Both China and the UAE have invested heavily into the former economic giants but the western economies must grow naturally as a result of their government policies to create a strong foundation once again on which to re-build. It makes no sense to invest in declining markets and it makes no money either. Investing in growth markets has been the particular theme that China and the UAE have followed in recent years and it is already paying off in the short term and is expected to for many years into the future. Money makes the economic world go around. These days and for the foreseeable future, it looks like investments from China and the UAE will inevitably buy the gas that’s needed to power the world’s economy. It’s a good thing they have the money to invest and have done so or the global economy and all these emerging markets would be in rough shape today and similar to the current state of the western economies.  I cannot see how that would not be good for anyone anywhere in the world.

More Investor Speculation Over Making Investments in Africa

Africa has long been considered a speculative investment. Although plagued with a troubling history, the region has finally begun to fix its widespread economic problems and analysts predict that profits should begin to flow and stock markets should rise. A major influence on Africa’s economy and where it’s at today is largely due to China’s is hunger for natural resources; the same resources African countries have an abundance of. As China flourishes as does India’s exports, giving India a greater standard of living and contributing to their economic prosperity.

It’s a great time to start investing in Africa considering you have the whole continent open to you, with very little competition and a political environment far better than it has been in the past 20 years. The African continent has long been hyped for its abundance of natural wealth and favorable demographics, but the escalation of better governance was the game-changer. Improved governance, investments by Eastern countries and the resolution of the debt crisis have resulted in substantial advancement in supporting businesses and the resulting maturation of the business climate within Africa.

Economic indicators all point to the tremendous investments and business opportunities available in the region. Recruiting local expertise is definitely critical for Africa, small enterprises have the potential to create jobs and sustainable economic growth. The best way to contribute to the success of these enterprises is to make investments in Africa, which will provide the region new cash flow. Business people should not see government as an obstruction to their aspirations but rather a rich source of information on how to engage and commerce in that country.

Mining and natural resources are only a piece of the investment story of a continent where over a thousand languages are spoken and climates vary from scorching deserts to frozen glaciers. India has come a long way, being partners with China does wonders to the power of India’s economy. As China prospers alongside will partners and affiliates of this country, contributing to a pool of emerging markets, rather than just China. China is a part of a larger picture in terms of our global vision and many investment trends will derive from the observation of Chinese investments and economic activity.

Chinese Foreign Investment Strategy Invests in The Future

You have got to give China some credit. As full-fledged members of the capitalist economic world, they have sure come a long way in a very short time. Since joining the World Trade Association (WTO) in 2001, they have ascended to the top of the heap, in a little over a decade. It seems as if the emerging nation is not intending to stop there. They have been going on a world buying spree, literally. And, in a cash-starved, credit-based economic world, their extensive cash reserves gave them an instant advantage over the rest of the global members; and Chinese investors have been taking full advantage of it.

Certainly, the western financial fiasco over the last five years, put their world competitors at a severe disadvantage, much to the benefit of China. This circumstance has propelled China into the role of a dominating economic force. Perhaps the rest of the investment community, can learn some lessons from the Chinese, when it comes to investing IN the future; as opposed to investing FOR the future. With regards to the latter, many of the investors in the western world, have realized that the future they invested IN; didn't turn out quite like they expected. China’s global foreign investment approach on the other hand, seems to have a well-thought-out plan behind it and appears as though things are turning out the way that China had intended, when they began making their huge shipping industry investments; all over the world.

China has been making sizable investments, totaling well into the hundreds of billions of dollars, into local foreign infrastructures, particularly in the transport sectors, such as ports, roads and rail. As well, they have been making huge investments in raw materials, as these are essential to a growing global economy, and will be in strong demand for many years to come. These investments by China are seen to be very wise indeed. Supply and demand. Their penchant for supporting and investing in emerging markets also illustrates some intelligent investment strategies, that will serve to position them in a position of economic strength and influence, when these new consumer markets begin to prosper; and demonstrate their full potential.

China recently has been buying stakes in foreign ports all around the world and investing in upgrades and modernizing them, to put them in a competitive position for the future global economy, that is expected to boom in the next five years. As emerging markets strengthen and begin to make viable contributions to the overall value of the world’s economy, China will be at the forefront leading the way, not only from their domestic position as the eventual largest consumer market in the world and biggest exporter; but they will also be in positions of economic strength and influence in many strategic locations around the globe. With regards to the newly evolving international supply chain route, that has already started to be rewritten, this is especially important to the success of many of the investments made by Chinese investors. The international investment community has got to give China credit, for having a vision and utilizing their vast resources, to realize their economic and investment goals.

China Offers Access to Asian Markets and Investment Abroad

When looking at the shareholders (world countries) and analyzing the numbers, in terms of total global foreign investments, China not only comes out on top in direct outbound foreign direct investment; but now it is also considered the top destination for inbound foreign direct investment. The interesting fact of it all, is that China has now become the world’s leading participant, in global capitalism.

In the first half of 2012, China took in $59.1 billion in foreign direct investment, compared to the $60.9 billion the year before. The United States on the other hand received  $57.4 billion, down 39 percent from the previous year. Furthermore, although sharply lower than figures in the U.S, China attracted $116 billion in direct foreign investment; in 2011. Both of these impressive numbers, provide alternatives for confused investors, who are seeking investment opportunities and options; outside the United States and Europe.

While these rising figures illustrate that China has learned how to compete in a capitalist world, it also clearly demonstrates that they also know what it takes to dominate, as well. Over the past few decades, Chinese investors have quietly risen from the bottom of the investor heap and worked their way to the top, by providing foreign investors with dependable access to Asian markets and also by encouraging their own wise investments; abroad.

The End of The Dollar as The Reserve Standard Currency

With the sanctions against Iran leading to the development of an oil for gold bartering market, and China and its trading partners continuing to seek out non-dollar payment settlement methods, the possibility of the end of the dollar as the international reserve standard currency; continues to rise.

Many people are unaware that the U.S dollar’s position as the world’s reserve currency is not mandated by any government. Its pre-eminence outside America rests on it being the best option for international transactions. And, once a competing currency becomes preferable for exchanges, international firms and other governments will move on; and it will be the end of the dollar as the reserve standard currency.

For the moment, the good news for the American dollar is that the Chinese yuan is not yet widely accepted and suffers from higher inflation, reducing its usefulness. But a shift in the world’s reserve currency, could be swifter than many investors, analysts and economists think. However until such time, the impact of inflation on currencies will be different among different economies, and investors must make investments that protect against inflation; when planning to save money for the future.

Economic Dominance Prompts Investors to Invest in Asia

For over a century the United States has been the largest economy in the world. However, the transition of global economic powerhouses has seen a shift from the United States, to the rich countries Europe, then to China and now; investors are focusing their attention on India.

With the current investor-hype India is receiving, it is as though the world had just discovered it. Yet, India's economic success is far from new. After independence in 1947, India made decades of meager progress, as its economy grew at an average GDP rate of 4 percent per year; between the 1950’s and the later part of the 1980’s. India's economy experienced a huge leap of 7.5 percent annually, between 2002 and 2006, which propelled India into the spotlight and earned itself recognition; as one of the world's best-performing economies. These impressive figures have prompted more and more investors, to seek access to Asian markets and a share of the region's prosperity.

Despite a myriad of obstacles that will challenge India's 1.1 billion people, the country is expected to record the second fastest growth among the world's major economies, by 2020.  According to the IMF, India will experience phenomenal growth of 9.7 percent, which will only be outperformed by China's bustling economy; which is expected to grow by 10.5 percent. Fueled by the ongoing financial successes and steady GDP growth of these two economic powerhouses, investing in Asia has become a very appealing option for private investors, across the globe.

Asia Relies Upon Shipping Investments to Meet Global Demand

Many international investors are realizing that the steady growth experienced in Asia, is creating profitable business and investment opportunities. Simply put, Asia is where the money is being made.

Following behind China and Japan, South Korea is a growing nation, determined to earn global recognition and international respect. Learning from mistakes made in the past by their two Asian role-models, and also those made by themselves, South Korea has converted their automobile, consumer electronics and many other innovative sectors, into products that worldwide consumers demand; each and every day.

To get these products into the hands of anxious buyers, Asia's leading manufacturers are relying heavily upon shipping companies, to consistently deliver the goods to shipping container ports; around the world. In order for this to flow uninterrupted, there needs to be continued investment into shipping ports to accommodate larger container ships, as well as additional container investment; to meet the rising demand for shipping containers.

Asia Pacific Countries Take The Lead in Global Investments

Asia and other countries in the Pacific Rim, are expected to become leaders in encouraging economic recovery around the world. Already, Asia-Pacific investors are making their presence felt, as they continue their worldwide investments; into other countries' infrastructure and shipping container port development. As well, most officials are as their own in preparation for increased global trade now and into the future.

The strong growth in Asia and the Pacific, remains better than in any other region. It continues to act as an anchor of stability for many of the developing countries in the region, and even some across the globe. For example, Chinese investment and other financial aid, has improved the shipping industry around the world; through aggressive container ship and port investing. Furthermore, South-South trade with Asia-Pacific in 2012, will help other developing regions, such as Africa and Latin America; further reduce their dependence on other developing economies.

As the western world's banking system and traditional investments continue to act unpredictably, the economies of Eastern countries (like China and UAE) have remained more stable over the last decade, and have worked to position themselves; to meet increasing international trade demands.