Latest Economic Review: Sunpointe Illuminations

The Case for Emerging Market Equity

The phrase emerging markets was coined by economists in the early 1980s to define investing in developing countries. Although the term is widespread, there is no one agreed upon definition. Most investors agree the term “emerging market investments” refers to countries or regions that (a) are undergoing fast economic growth (b) have a low ratio of a country’s gross domestic product (GDP) and per capita and (c) in general have financial systems that are relatively smaller and less complex than systems in developed markets. The BRIC countries — Brazil, Russia, India and China — are examples of developing economies with explosive growth in the past decade and improving financial infrastructure. Others such as areas of Southeast Asia, the Middle East and Africa are still in the early stages of developing a strong economy and stable financial environment.