Wednesday, 1 May 2013

Opportunities in Emerging Markets Renews Investor Confidence

shipping containers at South America port
When investors and financial firms peruse the growing number of options in the market, both domestically and foreign, many are looking for growth opportunities to take advantage of. In the past five years, ever since the financial meltdown began about 2008, growth opportunities in the United States and western Europe have been reduced, to say the least. As a result, many investors and financial firms have had to look to other countries to (hopefully) earn investment profits. What they have discovered is that there are abundant opportunities in the new emerging markets, in the eastern and southern parts of the world.

For example, over the past year alone, investors have pulled $22 billion from U.S. stock funds and a large amount of it has gone to more profitable alternative options available in emerging global markets. As it stands today, U.S. fund investors have invested more than $420 billion in emerging markets and that number is expected to grow in the next few years, as the United States continues the slow road to recovery. It has been a similar scenario in Europe and this puts even more pressure on western governments and businesses trying to rebuild investor confidence as well as their economies.

When investors are searching where to invest their hard-earned money, if they don’t see opportunities locally they will inevitably look elsewhere and that is what has been happening. They simply haven’t had much choice given the fact that Western Europe’s and the United State’s economies have been in decline for the last five years. The fact is, it has been the emerging markets of the world that have been driving the global economy over the course of this time and investors have simply put their money where they have the best chance to generate a positive return. Although it seems the Great Recession of the 21st century is nearing it’s end and recovery is slow, investors have lost their confidence, patience and a whole lot of money, in the meantime.

For the longest time, the United States and Europe were in the driver’s seat of the global economy with huge populous countries such as China, India, Russia, Brazil and the continent of Africa, taking a backseat when it came to generating strong domestic economic growth and contributing to the wealth of the global economy. Investors simply did not see the appeal in investing in markets with little or no economic growth prospects and rightfully so. Times have changed in the last twenty years and these regions of the world have now taken over the driver’s seat and many global investors are recognizing that the most profitable investment alternatives are likely be found in emerging markets.

No comments:

Post a Comment