May 08, 2013 | By Scott Minerd
“It appears the BRICs (Brazil, Russia, India, and China) will not see the same rate of increases in output moving forward. These economies are quickly maturing, and with such a large annual nominal GDP as a denominator, growth is no longer possible at the same rate. With that said, there is still a great deal of room for exponential growth in other emerging markets.
One group of countries that looks particularly attractive from an investment standpoint is the MIPS, which includes Malaysia, Indonesia, the Philippines, and Singapore. These countries have favorable demographics, and with the exception of Singapore, which is more mature, their respective stages of development, infrastructure needs, and low labor costs bode well for the prospects for growth in the coming years. Singapore is uniquely positioned as a financial hub with a favorable political climate, and will continue to benefit from Asia’s growth. If the trajectory these nations take is comparable to the rate at which the BRICs have grown over the past decade, their equity market returns are likely to be extremely robust, possibly in the order of several hundred percent between now and the middle of the next decade.”
The equity markets in Brazil, Russia, India, and China (the BRICs) have experienced tremendous appreciation due to economic growth, increasing by over 600% over the decade following the Asian Financial Crisis. However, the potential economic growth rate in these countries appears to have slowed as their focus has shifted to fixing outstanding structural issues.
By contrast, southeastern Asian countries including Malaysia, Indonesia, the Philippines, and Singapore (the MIPS) could enjoy stronger growth over the next decade, owing to improved fundamentals and positive demographic trends. Since the end of the global financial crisis, equity markets in the MIPS have substantially outperformed the BRICs.
Source: MSCI, Bloomberg, Guggenheim Investments. *Note: MIPS Index is the average of MSCI country index for Singapore, Malaysia, Indonesia, and Philippines, weighted by PPP-based USD GDP. All equity indices are nominal price indices, due to data availability for total return series. All equity indices are denominated in USD.
This article is distributed for informational purposes only and should not be considered as investing advice or a recommendation of any particular security, strategy or investment product. This article contains opinions of the author but not necessarily those of Guggenheim Partners or its subsidiaries. The author’s opinions are subject to change without notice. Forward looking statements, estimates, and certain information contained herein are based upon proprietary and non-proprietary research and other sources. Information contained herein has been obtained from sources believed to be reliable, but are not assured as to accuracy. No part of this article may be reproduced in any form, or referred to in any other publication, without express written permission of Guggenheim Partners, LLC. ©2014, Guggenheim Partners. Past performance is not indicative of future results. There is neither representation nor warranty as to the current accuracy of, nor liability for, decisions based on such information.
Risk assets will likely enjoy another rally while the Fed stays on hold, but the pause will only allow excesses to become more pronounced.
Should the mood this year at Davos prove once again to be a contra-indicator, this may be the signal that the economy is likely to re-accelerate soon and that the party in risk assets continues.
What would be a normal seasonal correction is turning into the worst December selloff in equities since the Great Depression.
Global CIO Scott Minerd and Head of Macroeconomic and Investment Research Brian Smedley provide context and commentary to complement our recent publication, “Forecasting the Next Recession.”
Anne Walsh, Chief Investment Officer for Fixed Income, shares insights on the fixed-income market and explains the Guggenheim approach to solving the Core Conundrum.
You are now leaving this website.Guggenheim assumes no responsibility of the content or its accuracy.
Your browser does not support iframes.
2019 Guggenheim Partners, LLC. All rights reserved. Guggenheim, Guggenheim Partners and Innovative Solutions. Enduring Values. are registered trademarks of Guggenheim Capital, LLC.