It wasn't long ago that 'emerging markets' meant little more than an investment being outside North ...
It wasn't long ago that 'emerging markets' meant little more than an investment being outside North America, Western Europe, Hong Kong or Japan. Many 'emerging markets' have now matured and are considered as alternatives to traditional developed markets. This has been brought sharply into focus since the liquidity crisis halted the climb of some developed markets. As more emerging markets - well, emerge - investment is now much more specific.
The Middle East, for example, has enjoyed several years of relatively high oil prices. However, the Middle East is about far more than just oil. The economies are growing very strongly and we are seeing huge investment in infrastructure as states seek to reduce their dependency on oil. The gross domestic product for the region as a whole grew by 5.3% last year and is expected to expand by 6% next year.
This growth, more than double that of the UK or Europe, is being fuelled by huge government spending as the authorities look to invest their petrodollars within the region.
Merrill Lynch estimates that $150bn will be spent on infrastructure over the next three years. This is manifest in the huge number of construction and real estate projects - Lehman Brothers estimates that there are nearly 2,000 ongoing projects in the Gulf region, amounting to more than $1.3trn over the 2007-2012 period.
This trend is repeated throughout the rest of the emerging Europe, Middle East and Africa region where economies are forecast to continue to grow faster than their Western developed counterparts.
This growth will be fuelled by buoyant global oil and natural resource markets; infrastructure investment; consumer growth and ongoing foreign investment.
There will be knock-on effects from a US consumer slowdown, but demand from other emerging markets, such as China and India, will help sustain healthy levels of trade and I remain optimistic that the high growth trends will continue.
- EMEA is rich in natural resources.
- EMEA is underrepresented in many emerging market portfolios.
- EMEA is a diverse investment universe.
- Nick Price, portfolio manager, Fidelity Emerging Europe, Middle East and Africa fund.
First mentioned in Cridland Report
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