BRIC Countries Lead Global Equity Markets

While most countries around the globe struggle, including large western nations, the BRIC countries of Brazil, Russia, India and China are still enjoying significant, albeit slower growth, as the emerging markets countries still have consumers spending in them, in contrast to the overall domestic global business in other countries.

Consequently, the large emerging markets countries have outperformed most others in the equity markets, even though of the four, India has fallen by a slight 0.3 percent on the Bombay Stock Exchange, although it still ranks them in the top four of the 15 largest markets across the world.

As far as major stock markets, Brazil, Russia and China are the only ones growing above the 8 percent mark so far this year, while India has changed very little. Even though BRIC countries have slowed down in growth, they're still growing at rates far beyond their North American, European and Japanese counterparts.

Leading the equity growth is China, which has grown by 24 percent this year on the Shanghai composite index, while Russia via the Micex has surged 17 percent, and Brazil has performed at an 8.8 percent growth rate on the Bovespa.

This does show that domestically the consumers in the respective BRIC countries haven't stopped spending, as exports from China, Brazil and Russis have dropped significantly, let by the largest drop in China exports in 13 years, as demand for Europe and the United States has dried up. In the case of Brazil, they've struggle on both sides of the equation, as industrially they've fallen off in output the worst since 1992 in the fourth quarter, while commodity exports struggled in 2008, although it has started to rebound some.

Russia has been hit especially hard because of its reliance upon oil and its prices to shore up its economy, as it's one of the chief exports of the country. The Russian ruble has also experienced a downturn, falling by 16 percent against the U.S. dollar so far in 2009. That of course also increases the cost of financing for Russian companies.

For these reasons, even though domestic spending seems to have continued in these emerging markets countries, some think that it is still probably too early to start investing in BRIC markets until valuations have fallen to the point where it makes risk worth it. If the global recession last longer than expected, it could cause BRIC investors a lot of headaches and time as they wait to not only recoup their capital, but make money on it as well. Most are waiting for valuations to drop to the point where most or all the bad news is already priced into the emerging economies.

Even so, investors in BRIC emerging market countries need to position themselves for when the bull market starts up again, as when they do, those in early enough will enjoy great returns for years ahead.

There's no doubt China will lead the way out of the emerging countries equity slump, as there are already signs it's turning around and Chinese consumers are still saving and spending money, to the benefit of the country. That's in contrast to 2008, when the Shanghai index plunged by 65 percent, and was only trading at 13.2 times the reported profits. Just this week though, the Shanghai index had already climbed to 17.6 percent earngings, already up 32 percent from the lows of 2008. China watchers believe they're either at or close to the bottom. China is expected to come out of the economic slowdown far better than the majority, if not the very best.

Because the BRIC countries are growing both economically and population wise faster than developed countries, specifically China and India, we'll see them continue to outperform in growth for years to come.

Other BRIC emerging markets will enjoy growth as well, and are already starting to turn the corner in some areas of their economies.

Much of India's growth also stems from strong domestic spending, as growth for the year ending on March 31 is projected to expand by about 7.1 percent. That's much more than expectatons of only 0.5 percent from the IMF. The central bank of India also cut interest rates from 9 percent in October down to 5.5 percent as of today.

For Brazil's emerging economy, which relies so much on the exportation of commodities and natural resources, they've rebounded from the Bovespa index shedding 41 percent last year, whic dropped price/earnings ratios down to 7 as of October, to 9.6 today. The BRIC economy enjoyed a resurgence of some metals also, helping them to grow. Internal infrastructure spending also helped the economy grow.

For Russia, even though they've suffered from lost oil revenues, the steel companies have been doing well based on the assumption increased infrastructure spending will increase profits in the industry. The Russian ruble also had a nice jump recently, increasing by 2.5 percnet against the euro and the U.S. dollar. That's four days in a row the currency has risen, pushing investors to move out of foreign currencies as the Russian government defends the ruble.

So how can we invest in emerging and BRIc economies? Investing in BRIC markets can be through bonds in the emerging markets, emerging or BRIC funds, BRIC mutual funds, BRIC or emerging market ETFs, or many of the similar investments we already invest in in the countries we reside in.

For investors with a short term mentality, investing BRIC country investment vehicles is probably not a good idea, as there is much volatility at this time, and they must be entered with a long term outlook. BRIC funds and ETFs, along with the other investment instruments will outperform most if not all of their large competitors in general, but over the short term, just like in developed nations, it's risky to enter emerging markets with a short term time frame.

The BRIC countries and markets of Brazil, Russia, India and China will make fortunes for investors in the years ahead, and those that are patient and in it for the long term, along with doing their homework, will be wildly successful and profiable as emerging markets and emerging economies lead the way economically over the next couple decades.