Before detailing the benefits of investing in emerging markets, let’s begin by defining what an Emerging Market is: It’s a vague term for economies that are new and growing – such as in Asia and Latin America and more recently, Eastern European countries. We use the term “Emerging” to define one that has potential for high growth and is still in the maturing phase.
Although known markets such as the United States and Canada, or the European Union can produce some high return investment opportunities, the markets of newer economies such as China, India, The Philippines, Thailand, Taiwan, Brazil and others are growing at a considerably higher rate. This provides appealing investment options, as many industries are growing faster than they are able to mature. Financing and funding are necessary for an economy to make the leap from new to mature, and as a result many investors are getting into these countries today.
One of the common denominators of emerging markets is that each nation tends to have high growth rates in natural production while many have rich natural resources. As the world continues to consume resources, the accessible markets of East Asia are more and more interesting for investors. With the advent of shipping containers, larger ships and growing infrastructure for exporting, these countries stand to grow at a very high rate and provide a viable alternative for investors.
The fact of the matter is that more and more investors are looking for alternative ways to invest, outside of simple stocks and bonds. With the liquidity of common stock trading today, it is wise to have a balanced portfolio that should include some alternative, high-growth investment opportunities. With emerging markets, the option to find these types of investments is quite easy if you know where to look. As economies start to mature, countries start to invest in infrastructure, banking and energy to help fuel their growth. The investment in these industries remains primarily from outside investors in more mature economies such as North America.
There are several ways to invest in alternatives – especially in emerging markets. I suggest looking for items such as Green Energy, natural resources, shipping container investments or short-term loans. There is a very large shift recently for outside investors to fund short-term lockup loans. In many cases you can find investments with daily, weekly or monthly liquidity. For many investors, the high growth potential of emerging marketplaces, coupled with the low-risk associated with some alternative investments; are a real draw.
Among the most important tips for investing in alternative investments is to be sure to do your research when considering any investments, especially in newer economies that may not have the same banking regulations and financial infrastructure you may be used to in North America or Europe. For the most part, with a little due diligence, these investments are sound and can return high yields. Depending on your ability, or desire, for risk in your investing, the emerging markets of East Asia can be a very lucrative space.