Emerging Markets Today
The simplest definition of emerging markets is that they are markets in countries that are expanding their industrialization and developing a market economy. China and India are two of the world's largest emerging markets. Other top emerging markets are Brazil, Indonesia, Mexico, Russia and Turkey. According to the International Monetary Fund (IMF), the following countries are also emerging markets: Argentina, Bulgaria, Chile, Estonia, Hungary, Latvia, Lithuania, Malaysia, Pakistan, Peru, Philippines, Poland, Romania, South Africa, Thailand, Ukraine and Venezuela. The largest regional emerging market is the ASEAN-China Free Trade Area. Many of these countries previously had predominately government run economies that are now open to the private sector and creating new marketplace opportunities. There many types of asset classes available in emerging markets, with stocks and mutual funds being two very popular choices.
Why Emerging Markets Are Important
The majority of the world's population growth is taking place in countries that have emerging markets. The rapid social and economic growth in these countries means they are becoming increasingly more important contributors to the global economy. Experts predict that emerging markets will double their share of the world's output by 2020. As the importance of these countries to the global economy grows, so does the risk that economic failures in one or more emerging markets could have a ripple effect on other markets, even mature markets like the United States. Many investors feel that emerging markets not only represent the chance to yield great profits, but also feel that contributing to these countries' booming economies is important to the health of the global economy.
The decision whether or not to invest in emerging markets is different for every investor. Many financial experts consider emerging markets to be a growing investment trend. Although, with the potential for great rewards also comes the potential for great losses. Some conservative investors feel that investing in emerging markets will push them past their risk-tolerance level, while others praise them as a great way to diversify their portfolio. Before you considering investing in an emerging market, consider all the non-market factors such as government regulations, political stability and overall economic health of the country as part of your investment decision criteria.
About the Author: Sterling Brus is a newer investor who loves to study different markets and big name investors. He encourages you to read more about big name investors like Timothy Sykes and their strategies to learn more about what works - and what doesn't.