Emerging markets

From Wikipedia, the free encyclopedia

Emerging markets are nations with social or business activity in the process of rapid growth and industrialization. The economies ofChina and India are considered to be the largest.[1] According to The Economist many people find the term outdated, but no new term has yet to gain much traction.[2] Emerging market hedge fund capital reached a record new level in the first quarter of 2011 of $121 billion. [3] The seven largest emerging and developing economies by either nominal GDP or GDP (PPP) are China, Brazil, Russia, India,Mexico, Indonesia, and Turkey. The ASEANChina Free Trade Area, launched on January 1, 2010, is the largest regional emerging market in the world.[4]

Terminology
In the 1970s, "less economically developed countries" (LEDCs) was the common term for markets that were less "developed" (by objective or subjective measures) than the developed countries such as the United States, Western Europe, and Japan. These markets were supposed to provide greater potential for profit, but also more risk from various factors. This term was felt by some to be not positive enough so the emerging market label was born. This term is misleading in that there is no guarantee that a country will move from "less developed" to "more developed"; although that is the general trend in the world, countries can also move from "more developed" to "less developed". Originally brought into fashion in the 1980s by then World Bank economistAntoine van Agtmael,[5] the term is sometimes loosely used as a replacement for emerging economies, but really signifies a business phenomenon that is not fully described by or constrained to geography or economic strength; such countries are considered to be in a transitional phase between developing and developed status. Examples of emerging markets include Indonesia, Iran, some countries of Latin America, some countries in Southeast Asia, South Korea, most countries in Eastern Europe, Russia, some countries in the Middle East, and parts of Africa. Emphasizing the fluid nature of the category, political scientist Ian

Bremmer defines an emerging market as "a country where politics matters at least as much as economics to the markets".[6] The research on emerging markets is diffused within management literature. While researchers includingc, George Haley, Vladimir Kvint, Hernando de Soto, Usha Haley, and several professors from Harvard Business School and Yale School of Management have described activity in countries such as India and China, how a market emerges is little understood. In 1999, Dr. Kvint publishid this definition: "Emerging market country is a society transitioning from a dictatorship to a freemarket-oriented-economy, with increasing economic freedom, gradual integration with the Global Marketplace and with other members of the GEM (Global Emerging Market), an expanding middle class, improving standards of living, social stability and tolerance, as well as an increase in cooperationn with multilateral institutions" [7] In 2008 Emerging Economy Report,[8] the Center for Knowledge Societiesdefines Emerging Economies as those "regions of the world that are experiencing rapid informationalization under conditions of limited or partial industrialization." It appears that emerging markets lie at the intersection of non-traditional user behavior, the rise of new user groups and community adoption of products and services, and innovations in product technologies and platforms. More critical scholars have also studied key emerging markets like Mexico and Turkey. Thomas Marois (2012, 2) argues that financial imperatives have become much more significant and has developed the idea of 'emerging finance capitalism' - an era wherein the collective interests of financial capital principally shape the logical options and choices of government and state elites over and above those of labor and popular classes.[9] Julien Vercueil[10] recently proposed an pragmatic definition of the "emerging economies", as distinguished from "emerging markets" coined by an approach heavily influenced by financial criteria. According to his definition, an emerging economy displays the following characteristics : 1. Intermediate income : its PPP per capita income is comprised between 10% and 75% of the average EU per capita income.

2. Catching-up growth : during at least the last decade, it has experienced a brisk economic growth that has narrowed the income gap with advanced economies. 3. Institutional transformations and economic opening : during the same period, it has undertaken profound institutional transformations which contributed to integrate it more deeply into the world economy. Hence, emerging economies appears to be a by-product of the current globalization. At the beginning of the 2010's, more than 50 countries, representing 60% of the world's population and 45% of its GDP, matched these criteria.[11] Among them, the BRICS. The term "rapidly developing economies" is being used to denote emerging markets such as The United Arab Emirates, Chile and Malaysia that are undergoing rapid growth. In recent years, new terms have emerged to describe the largest developing countries such as BRIC that stands for Brazil, Russia, India, and China,[12]along with BRICET (BRIC + Eastern Europe and Turkey), BRICS (BRIC + South Africa), BRICM (BRIC + Mexico), BRICK (BRIC + South Korea), Next Eleven (Bangladesh, Egypt, Indonesia, Iran, Mexico, Nigeria, Pakistan, Philippines, South Korea, Turkey, and Vietnam) and CIVETS (Colombia, Indonesia, Vietnam, Egypt, Turkey and South Africa).[13] These countries do not share any common agenda, but some experts believe that they are enjoying an increasing role in the world economy and on political platforms. It is difficult to make an exact list of emerging (or developed) markets; the best guides tend to be investment information sources like ISI Emerging Markets and The Economist or market index makers (such as Morgan Stanley Capital International). These sources are well-informed, but the nature of investment information sources leads to two potential problems. One is an element of historicity; markets may be maintained in an index for continuity, even if the countries have since developed past the emerging market phase. Possible examples of this are South Korea[14] and Taiwan. A second is the simplification inherent in making an index; small countries, or countries with limited market liquidity are often not considered, with their larger neighbours considered an appropriate stand-in. In an Opalesque.TV video, hedge fund manager Jonathan Binder discusses the current and future relevance of the term "emerging markets" in the financial world. Binder says that in the future investors will not necessarily think of the

traditional classifications of "G10" (or G7) versus "emerging markets". Instead, people should look at the world as countries that are fiscally responsible and countries that are not. Whether that country is in Europe or in South America should make no difference, making the traditional "blocs" of categorization irrelevant. The Big Emerging Market (BEM) economies are (alphabetically ordered): Brazil, China, Egypt, India, Indonesia, Mexico, Philippines,Poland, Russia, South Africa, South Korea[14] and Turkey.[15] Newly industrialized countries are emerging markets whose economies have not yet reached first world status but have, in a macroeconomic sense, outpaced their developing counterparts. Individual investors can invest in emerging markets by buying into emerging markets or global funds. If they want to pick single stocks or make their own bets they can do it either through ADRs (American depositor Receipts - stocks of foreign companies that trade on US stock exchanges) or through exchange traded funds (exchange traded funds or ETFs hold basket of stocks). The exchange traded funds can be focused on a particular country (e.g., China, India) or region (e.g., Asia-Pacific, Latin America).

International Monetary Fund list

As of July 16, 2012, the International Monetary Fund (IMF) labels the following countries as "emerging economies":[16]

Argentina Brazil Bulgaria Chile China[17] Estonia

1

Indonesia Latvia Lithuania Malaysia Mexico Pakistan

Poland Romania Russia South Africa Thailand Turkey

Hungary India

Peru Philippines

Ukraine Venezuela

Also included in the group of "advanced economies" by the IMF.

[edit]Columbia

University EMGP List

As of November 1, 2012, the Emerging Market Global Players (EMGP) project at Columbia University includes the following economies into the watch list:

Argentina Brazil Chile China[17] Hungary India Israel South Africa

South Korea Mexico Poland Russia Slovenia Thailand Taiwan Turkey

The EMGP project, a collaborative effort led by the VCC, brings together researchers on FDI from leading institutions in emerging markets to produce annual reports identifying the top multinationals from each of a number of emerging markets. Each report is posted on this website as well as on the website of the partner institution in the relevant country. The information in the reports, including the rankings by foreign assets, will be of interest to researchers, bankers, investors, and the media, as well as to multinational firms in many countries. The EMGP project is coordinated by: Dr. Victor Z. Chen (EMGP Global Coordinator and Editor) and Dr. Valentina Bratu (EMGP Manager and Editor).

[edit]FTSE

list

The FTSE Group distinguishes between Advanced and Secondary Emerging markets on the basis of their national income and the development of their market infrastructure. The Advanced Emerging markets are classified as such because they are upper or lower middle income GNI countries with advanced market infrastructures or high income GNI countries with lesser developed market infrastructures.[18][19] The Advanced Emerging markets are:

Brazil Czech Republic Hungary Malaysia Mexico

Poland[20] South Africa Taiwan[20] Thailand[21] Turkey

The Secondary Emerging markets include some low income, lower middle, upper middle and high income GNI countries with reasonable market infrastructures and significant size and some upper middle income GNI countries with lesser developed market infrastructures. The secondary emerging markets are:

Chile China Colombia Egypt India Indonesia

Morocco Pakistan Peru Philippines Russia UAE

[edit]MSCI

list

As of May 2010, MSCI Barra classified the following 21 countries as emerging markets:[22]

Brazil Chile China Colombia Czech Republic Egypt Hungary

India Indonesia Malaysia Mexico Morocco Peru Philippines

Poland Russia South Africa South Korea Taiwan Thailand Turkey

The list tracked by The Economist is the same, except with Hong Kong, Singapore and Saudi Arabia included (MSCI classifies the first two as developed markets and the third one is unclassified due to foreign ownership restrictions). [edit]S&P

list

[24]

As of 31 December 2010, Standard and Poor's classified the following 20 countries as emerging markets:[23]

Brazil Chile China Colombia Czech Republic

Egypt Hungary India Indonesia Malaysia

Mexico Morocco Peru Philippines Poland

Russia South Africa Taiwan Thailand Turkey

The United Arab Emirates, market by S&P.[25] [edit]Dow

Qatar, and

Jordan are currently under review for being upgraded to the status of emerging

Jones list

As of September 2011, Dow Jones classified the following 22 countries as emerging markets:[26]

Argentina

China

Czech Republic

Egypt

Brazil Chile Colombia Mexico Peru

India Indonesia Malaysia Philippines South Korea Taiwan Thailand

Hungary Poland Russia Turkey

Morocco South Africa

[edit]Frontier

Strategy Group (F10) list

In July 2011, Frontier Strategy Group released the F-10, a list of the top 10 emerging markets Western multinational senior executives at Fortune 500 companies are tracking globally.[27] The F-10 emerging market list is as follows:

China Brazil India Mexico Russia Indonesia Colombia Argentina Chile Turkey

[edit]BBVA

Research

In November 2010, BBVA Research introduced a new economic concept, to identify a key emerging markets.[28] This classification is divided in two set of developing economies. EAGLEs (Emerging and Growth-Leading Economies): Expected Incremental GDP in the next 10 years to be larger than the average of the G7 economies, excluding the US.

China India Indonesia South Korea Taiwan

Brazil Mexico Russia Turkey

NEST: Expected Incremental GDP in the next decade to be lower than the average of the G6 economies(G7 excluding the US) but higher than Italys.

Argentina Bangladesh Chile Colombia Egypt

Malaysia Nigeria Pakistan Peru Philippines

Poland Thailand South Africa Ukraine Vietnam

Other Emerging Markets[29]

Bahrain Bulgaria Czech Republic Estonia Hungary

Jordan Kuwait Latvia Lithuania Mauritius

Morocco Oman Qatar Romania Slovakia

Sri Lanka Sudan Tunisia UAE Venezuela

[edit]Emerging

Markets Index

The Emerging Markets Index is a list of the top 65 cities in emerging markets. The following countries had cities featured on the list (as of 2008):

Argentina Brazil Bulgaria Chile China Colombia Dominican Republic Ecuador

Egypt Hungary India Indonesia Kenya Lebanon Malaysia Mexico

Morocco Pakistan Peru Philippines Poland Romania Russia Senegal

South Africa Thailand Tunisia Turkey Ukraine Uruguay Venezuela Vietnam

[edit]

Summary list
If we plot the lists above to table below, there are only 1 country always appears in every list (Next Eleven/BRIC, CIVETS, FTSE, MSCI, The Economist, S&P, Dow Jones, Columbia University EMGP). It is Turkey. Indonesia and Turkey, which have been categorized with Mexico and Korea as part of the MIKT economies. Egypt, since January 25, 2011, has been affected by protests and is now in a transition process. There are also several countries to only appear on one list. They are Iran (Next 11), Israel (Columbia University EMGP), Hong Kong, Singapore, Saudi Arabia (The Economist), Afghanistan (Dow Jones) and Sudan, Tunisia, Ukraine, and Venezuela (BBVA).
Emerging Markets by Each Group of Analysts

Country

IMF

Next11/BRIC

CIVETS

FTSE

MSCI

THE ECONOMIST

S&P

DOW JONES

Columbia BBVA University EMGP

Afghanistan

Argentina

Bahrain

Bangladesh

Brazil

Bulgaria

Emerging Markets by Each Group of Analysts

Country

IMF

Next11/BRIC

CIVETS

FTSE

MSCI

THE ECONOMIST

S&P

DOW JONES

Columbia BBVA University EMGP

Chile

China

Colombia

Czech Republic

Egypt

Estonia

Emerging Markets by Each Group of Analysts

Country

IMF

Next11/BRIC

CIVETS

FTSE

MSCI

THE ECONOMIST

S&P

DOW JONES

Columbia BBVA University EMGP

Hong Kong

Hungary

India

Indonesia

Iran

Israel

Emerging Markets by Each Group of Analysts

Country

IMF

Next11/BRIC

CIVETS

FTSE

MSCI

THE ECONOMIST

S&P

DOW JONES

Columbia BBVA University EMGP

Jordan

Kuwait

Latvia

Lithuania

Malaysia

Emerging Markets by Each Group of Analysts

Country

IMF

Next11/BRIC

CIVETS

FTSE

MSCI

THE ECONOMIST

S&P

DOW JONES

Columbia BBVA University EMGP

Mauritius

Mexico

Morocco

Nigeria

Oman

Pakistan

Peru

Emerging Markets by Each Group of Analysts

Country

IMF

Next11/BRIC

CIVETS

FTSE

MSCI

THE ECONOMIST

S&P

DOW JONES

Columbia BBVA University EMGP

Philippines

Poland

Qatar

Romania

Russia

Saudi

Emerging Markets by Each Group of Analysts

Country

IMF

Next11/BRIC

CIVETS

FTSE

MSCI

THE ECONOMIST

S&P

DOW JONES

Columbia BBVA University EMGP

Arabia

Singapore

Slovakia

Slovenia

South Africa

Sri Lanka

Emerging Markets by Each Group of Analysts

Country

IMF

Next11/BRIC

CIVETS

FTSE

MSCI

THE ECONOMIST

S&P

DOW JONES

Columbia BBVA University EMGP

South Korea

Sudan

Taiwan

Thailand

Turkey

Tunisia

Emerging Markets by Each Group of Analysts

Country

IMF

Next11/BRIC

CIVETS

FTSE

MSCI

THE ECONOMIST

S&P

DOW JONES

Columbia BBVA University EMGP

UAE

Ukraine

Venezuela

Vietnam

[edit]Global

Growth Generators

"Global Growth Generators", or 3G (countries), is an alternative classification determined by Citigroup analysts as being countries with the most promising growth prospects for 2010-2050. These consist of Indonesia, Egypt, seven other emerging countries, and two countries not previously listed before, specifically Iraq and Mongolia. [edit]Six

major emerging economies

According to World Bank issued at May 2011, BRIC countries plus South Korea and Indonesia will lead the world's economy with more than a half of all global growth by 2025.[30]

BRIC
From Wikipedia, the free encyclopedia In economics, BRIC is a grouping acronym that refers to thecountries of Brazil, Russia, India and China, which are all deemed to be at a similar stage of newly advanced economic development. It is typically rendered as "the BRICs" or "theBRIC countries" or "the BRIC economies" or alternatively as the "Big Four".

Reference
Wikipedia (2013) Emerging markets. http://en.wikipedia.org/wiki/Emerging_markets - accessed on 15/03/2013 Wikipedia (2013) BRIC. http://en.wikipedia.org/wiki/BRIC - accessed on 15/03/2013