As defined in 1981 by Antoine W. Van Agtmael, an emerging market economy (EME) is an economy with low to middle per capita income. In other words, many countries that fall into the category as an “emerging market” can vary from big to very small, depending on their developments and reforms set for the future ahead.
Its definition is the reason why China, although considered one of the top economic superpowers in the world, is under this category together with its far smaller and less developed counterparts. With its 1.3 billion population, China offers several opportunities to local and global investors through mutual funds and ETFs, among others.
Brazil, on the other hand, has been an important economic market driver in Latin America and it holds the largest market in the said region. Many analysts have predicted that despite its present struggles with inflation and slow growth, investors have high hopes on its rebound that could offer several investing options.
Russia’s commitment to capitalism has brought a tremendous impact to its economy which resulted to a global economic boom that has catapulted the country’s stock market to become one the world’s powerful performers. However, a recent downturn in 2015 has limited investors to safer options like mutual funds investing in Russia.
India, the world’s second most populous country, is another potential economic powerhouse that is making a huge impact on the global economy. While the republic remains to be struggling to address widespread income inequality, it is on track to becoming a hotspot for the world’s best young entrepreneurs. It also helps that it is located in the cultural region of Indian Ocean—a zone with extraordinary potential for growth in terms of transoceanic commerce.
Emerging economies may offer more optimistic opportunities and introduce new investment opportunities, analysts have pointed out the important of considering the effects of an open economy on its people. Furthermore for investors, identifying the risks when thinking about betting on an EME should still be on top of their list.