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Confidence High in Investment in Emerging Markets

Yet another global index reveals that emerging markets are dominating investment confidence. Three of the BRICs - China, India and Brazil - sit at the forefront of future plans for investment.

A.T. Kearney have recently released their latest Foreign Direct Investment Confidence Index 2010. In the listing that covers 25 countries, China, India and Brazil dominate the top five as the most attractive countries for investment. Two other emerging markets (Poland and Mexico) join them in the top ten.

It's two years since A.T. Kearney published the last Index and the new edition comes hot on the heels of a major global economic downturn. Unsurprisingly, the 2010 results are somewhat different to those revealed in 2008.

While the Index reports that many of the world's largest companies "are wary of investing during the current climate", it is quick to point out that emerging markets are the exception to this rule. According to A.T. Kearney, "several emerging markets remain attractive to foreign investors - China, India and Brazil". Their investment attractiveness lies in their "scale and depth" and particularly, in their "growth potential to weather the storm". All three countries have come out of the global recession stronger than ever.

China remains at the top of the Index, which it has led since 2002, with investors drawn to its "enormous internal market". Second place this year goes the US (up from third), a position which A.T. Kearney believes is due to "foreign investors' flight to safety".

Third placed for confidence in investment is Brazil (up from fifth place in 2008). For A.T. Kearney, this confidence comes on the back of Brazil's "strong economic rebound" and its growing middle class. Brazil's economy is currently booming - recently released figures showed 2% GDP growth in Q4 last year and an increase of 4% in investment activity. Most analysts are predicting between 5.5% and 6% growth for this year.

Behind Brazil for investment confidence is Germany, Europe's top destination. Poland follows in sixth position with a spectacular climb of 16 places in the Index. This hike is mainly due to Poland's success at riding out the economic crisis, particularly in the context of Eastern Europe where many economies have fallen into deep recession.

Australia is the next best bet for investment confidence thanks to its vast resources and proximity to Asian markets. The next emerging market on the list is Mexico, up 11 places to eighth. Like Brazil, investment in Mexico is favoured because of the nearshoring and nearby offshoring possibilities for American and European companies.

Obelisk's confidence in emerging markets is similar, although we tip Brazil as more attractive than China. Brazil's democracy makes investment and doing business there easier. However, we're well aware that emerging markets are the key to the future of investment and many of them hold potential that is currently still untapped.

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