Emerging Markets Stock Investing
Emerging market stocks have the potential for higher rewards and higher risks than developed markets
For investors looking for the highest potential return on their equity investments, the key word has to be growth. A growing economy produces more wealth, which spurs higher consumption, which stimulates increased production of goods and services. And the hottest economies in the world right now are not those of the U.S., Western Europe, or Japan. If you want double-digit economic growth, you need to look at China, India, and a handful of other countries that make up the emerging markets.
The emerging markets are those in which per capita income is in the low to middle range. Countries are said to be emerging when they are actively developing and opening up their economies, instituting currency reform, eliminating protective regulations, and encouraging transparency and accountability in corporate governance. Emerging or developing countries currently make up about 20% of the global economy, but contain about 80% of the world's population.
Emerging market stocks have the potential for both higher rewards and higher risks than those of developed markets. But with all the warnings out of the way, growth rates in emerging markets in or near double figures will produce opportunities for growth investors that can't easily be matched in the developed world. And we are discovering new candidates every week as more and more emerging market stocks come public on Western exchanges.
For more information on Emerging Markets Investing, click on the links below:
Cabot China & Emerging Markets Frequently Asked Questions
Editor Paul Goodwin answers common questions about Cabot China & Emerging Markets Report.
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