Global Macro and Investing in BRIC's

By Jesse Baruch

Brazil, Russia, India, and China are collectively known as the BRIC's. The paper in 2003 by Jim Oneil entitled The Path to 2050 brought the BRIC's to the forefront of emerging market investors. The idea is that by the year 2050 the BRIC nations will be as large and powerful if not more then existing super powers. Based on economic and demographic forces the paper might be right.

Now that these nations have embraced capitalism and started to throw out corruption they are able to better compete for investment capital with other nations. Due to this and the fact that they have huge and growing populations along with large natural resources and you have a good chance for a big move on their way to power and influence.

The first letter in the acronym is B and it stands for Brazil. One of the largest non OPEC oil nations Brazil is also the home to many different industries. They have a large and proven banking system as well as airlines and manufacturing. But the two biggest drivers for the next several years will likely be the growing education of its population and the huge energy supplies that Brazil has.

Russia is probably the biggest wildcard in this group as they are still trying to figure out how to fully embrace capitalism. Russia has solid hard working people, with many being very educated and competent engineers, computer programmers, etc. Their remaining major issue is that of their leadership. With a leader who is an ex KBG agent things run but do not always run well. If the leadership can figure a few things out then Russia will be able to become very strong in the coming years.

India has one of the largest populations in the world and has a large educated populations that speaks English. Because of this they are the kings of outsourcing. Have you ever called up customer service and gotten an Indian for Dell, Apple, Etc? Due to their educated population they are also quickly becoming legitimate leaders in technology. After having been laggards in the tech space the last ten years has seen India become a major player in the global markets.

China is last but not least having recently passed up Japan as having the second largest stock market in the world behind the United States. Long a communist nation China now takes the soft line in politics and instead is focused on improving their economy and the standard of living for its citizens. There are obviously still may challenges that lay ahead of China and the rest of the BRIC nations but they appear to be overcoming them and getting rid of the old guard of corruption and instead becoming huge economic powerhouses. - 23223

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