Does It Still Make Sense To Invest In Emerging Markets?

Does It Still Make Sense To Invest In Emerging Markets?

Emerging markets are one of the most important drivers of global economic growth. Emerging economies are forecast to grow at a considerably faster rate than the United States is. The International Monetary Fund predicts that emerging economies will grow at as much as 2-3 times the rate of that of the US.

China and India are the fastest growing, largest, and arguably most important of all the emerging markets around the world, with Brazil a close third. There is a debate about whether China has fully evolved into an advanced economy. However, they are by no means the only options. Markets in many countries in both Asia and Africa are beginning to mature, reshaping the global economy as they do.

But with the first indicators of a global slowdown and potential recession becoming more prominent in 2019, many investors are beginning to wonder whether emerging markets are still a safe bet.

Advantages of Investing in Emerging Markets

In addition to their prodigious growth rate in recent years, emerging markets have served as an important means for investors in advanced economies such as the United States to diversify their portfolio. There are a number of sectors in emerging markets that make for excellent investment targets, especially if your goal is to diversify your portfolio in a relatively risk-averse way.

Emerging markets also tend to perform differently to advanced markets. This is good news for anyone looking to diversify and it opens up the possibility of betting both for and against specific technologies or sectors.

The Energy Sector

The energy sector is a vital sector for emerging economies. China and India are both experiencing exponential population growth and growing life expectancies. Energy generation is a topic of paramount importance both domestically and internationally.

Emerging markets provide numerous investment opportunities within the energy sector. As well as investments in energy providers themselves, there are also businesses like Vinarco. Vinarco provides a variety of services, such as oil and gas recruitment, consultancy, and procurement. Investors in emerging market energy sectors are spoiled for choice.

The Foundation of the Global Economy

While the US and China dominate the global economy, emerging markets are also of vital importance. During the housing bubble crisis and subsequent financial crash of 2008, it was emerging markets that prevented an even worse calamity from unfolding. Brazil, India, and China were largely to thank for this effect.

While many iconic Wall Street corporations succumbed to the ensuing market chaos, these relatively small economies were able to prop up the economies of the rest of the world long enough for repairs to take place. This is an elegant illustration of both the importance of and underappreciation for emerging markets in the global economy.

Emerging markets have plenty of fruitful investments to offer the modern entrepreneur. As more emerging markets mature and transition into advanced economies, the range of options available to investors will explode. When the leading emerging economies join economic superpowers such as the United States and China, they may even usher in the next golden age of economics. If you are on the lookout for new and exciting investment opportunities, consider an emerging market.