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Investment in Emerging Markets Booming

More and more experts are tipping investment in emerging markets. Emerging markets are forecast to represent up to 75% of global growth in the near future, proof that now is the time to make investment in property, stocks and equities in these countries.

Emerging markets, particularly the BRIC nations (Brazil, Russia, India and China), are now leaving the recession behind and are expected to lead the rest of the world out of the economic downturn. Speaking in Seoul, Allan Conway, head of emerging market equities at Schroder Investment Management, said that as emerging markets drive world growth, they will represent "70% to 75% of global growth for the foreseeable future".

According to Bloomberg, the top ten global highest performing benchmark indexes this year are all emerging markets. Indexes in Argentina and Sri Lanka have more than doubled while Brazil's stock exchange has increased in value by 55% so far during 2009.

Conway went on to say that because of increasing domestic demand - Brazil saw a 2.1% quarterly increase in Q2 - and growing trade between developing nations (Brazil and China are ever-bigger trade partners), "emerging market growth looks much better than developed economies".

According to Conway, the BRIC nations are in an "early stage" of development, which is set to take off. "The importance of BRICs will just get bigger and bigger," he said, emphasising that this is not a short-term phenomenon but one that is here to stay.

Domestic demand in the BRIC nations is huge and rising. Between them, the four countries have a population of 2.9 billion and purchasing power in the quartet is rising fast, creating huge internal markets. Better credit conditions - for example, Brazil has historically low interest rates and record consumer credit - also adds to consumer demand.

Other investment experts have echoed Schroder. JPMorgan Chase has advised investors to buy equities in emerging markets and sell shares in developed countries. The advice to make investment in emerging markets has already taken effect. Santander, the euro zone's largest bank by market value and the 7th largest in the world, made US$7 billion last week from the Initial Public Offering (IPO) of its Brazilian subsidiary.

The IPO was the biggest ever in Brazil and the sale of shares gives Santander in Brazil a market value of US$50 billion. Santander bought Brazil's Banco Real in 2007 and the recent listing has made €1.43 billion in capital gains for Santander's Brazilian subsidiary.

Santander's IPO proves that floatations have resuscitated after more than 18 months of stagnation on world stock markets. It also proves that there is immense confidence in investing in Brazil. After a blip in GDP growth in Q1 this year, Brazil's economy is now back on track for strong increases. Most experts are predicting around 4.5% GDP growth for 2010 with Merrill Lynch out at the front predicting an extremely healthy 5.3%.

Most emerging markets offer excellent investment opportunities in stocks and equities, but few can match Brazil when it comes to property. With its stunning scenery, excellent climate and almost-bargain luxury property, Brazil real estate has no competitors. And since property investment by foreigners is very limited in China and India, this situation is likely to continue for the foreseeable future. No wonder property analysts are predicting one of the biggest real estate booms in Brazil ever.

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