Investing in Emerging Markets in 2020

Investing in emerging markets, especially the BRIC countries, has been a winning strategy over the past two decades. As Brazil, Russia, India, and particularly China matured into full-scale capitalism, investors made huge gains. In recent years, though, that has changed somewhat. For most of these countries, growth has been projected to slow down. Officials in these nations are now looking for ways to sustain what they have and find new ways to grow.
This news has the potential to scare some investors off. However, the truth is that the outlook for 2020 is better than had originally been projected. In part, this is because of modifications made by the fully industrialized trading partners of nations in the developing world. For example, United States President Donald Trump’s stance on tariffs has softened.
This is expected to benefit both the US and its trading partners, particularly China. When trade hostilities were high, each country sold much less than expected to the other. In 2019, US imports from China were down by $35 billion. Similarly, China imported $40 billion less from the US than previously. Particularly as this is an election year in the US, it’s expected that the Trump Administration will take steps to maintain a friendlier relationship.
Emerging markets like China and India are expected to have big growth in the tech space in the coming years. For example, China is projected to have over 600 million 5G customers by 2025. That’s almost twice the population of the US, and that’s only one market. India is also seeing huge growth when it comes to the adoption of new technologies. In part, this has been driven by political reforms. Corporate taxes have been reduced, which is expected to drive innovation and make it more affordable to go into business. Changes to regulation have also improved prospects for entrepreneurs.
Finally, politics have made big changes in Brazil’s business environment, too. Privatization is expected to accelerate in the coming months and years. Social security reform is moving forward. Although Brazil is having a slower recovery than analysts had hoped, it is proceeding. The central bank is taking steps to take measures to stimulate the economy.

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