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Elliott Morss | October 23rd, 2017

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Where in the World to Invest? A Search of the Globe

Where in the World to Invest? A Search of the Globe
© Elliott R. Morss, Ph.D.

Introduction

It is easy to remain fixated on the US. Buoyed on by the Trump Presidency, US stocks continue up. But as measured by standard indices such as price/earnings ratios, US markets are high.

So where else, and by what standards do we choose?

Regional Growth

Consider first what is happening regionally as measured by projected GDP and population growth rates. Table 1 indicates that the populations of Sub-Saharan Africa are growing most rapidly followed by North Africa and the Middle East. Rapid urbanization is slowing growth rates in other regions. Population growth will at some point become a spur to economic growth as demand from growing middle classes emerge. When it comes to present-day economic growth, Asia leads all other regions.

Table 1. – Projected Population and GDP Growth Rates, By Region

Source: FocusEconomics

Countries

From regions, I went to countries with populations of 5 million and up. I screened out countries facing significant political and military uncertainties. And as in Table 1, I look at countries using economic and population growth as proxies. I also include the size of the government deficit as an indicator of how well the government is managing the country’s finances. Green indicates an impressive number while red signifies a problem area.

Remember BRIC – Brazil, Russia, India and China. And at one point, I thought Brazil would be one of the leading countries in the first half of the 21st century. And Russia has serious problems. I worry about India’s rapid growth and its failure to invest in needed infrastructure. China made the infrastructure investments but is now in the tricky process of transitioning from a country driven by export growth to one trying to satisfy the demands of a rapidly growing middle class.

Costa Rica, the Dominican Republic and Peru are my choices in South America. They have progressed steadily over the last decade. The population and GDP growth numbers for the Côte d’Ivoire and Ghana are impressive. In Eastern Europe, Uzbekistan is growing rapidly and is actually running a small government surplus!

In Asia, my favorites are Cambodia, Thailand and Vietnam. They are “smaller” countries but they have demonstrated the ability to grow steadily, even during political uncertainties. As I have written, India worries me. A democratic form of government is not well suited for a rapidly developing country.

Table 2. – Promising Countries for Investments

Sources: IMF, FocusEconomics

Investment Vehicles

Table 3 provides information on how to invest in countries I have mentioned above. If a country-specific ETF is not available, I would not invest without physically visiting the country and finding someone I trust to handle transactions.

Table 3. – How to Invest in Selected Countries

Sources: World Federation of Exchanges, Yahoo Finance, Bloomberg

The above is a starting point for research on investing around the globe.

Comments

  1. Carl Tretner

    Elliott,

    Serious problems in Russia ? – I guess you missed the boom on the Russian stock. exchange. Read the latest IMF-Report. The Russians are not doing badly. They have a very modern budget system (they had a very smart German consultant ?) and are very carefully fixing the assumptions. In addition they aim to become independent of the Dollar by accumulating gold.

  2. The problems in Russia have nothing to do with budget systems. The two primary problems are:

    1. No history with using Western-style markets. From the Tsars forward, Russia has used central planning to allocate resources.

    2. Governance. If Putin does not like you, he kills you and seizes the assets of your company.

  3. Hello,

    interesting article. But I do have a question. Is the ETF the only option for investment? I think sometimes the most profitable and less risky opportunities hide in places where you invest directly to specific businesses. Also I miss one country that I would like to advocate for and that is Lithuania. (And even the whole Baltic states region) Lithuania is young, ambitious, its GDP growth for the first quarter of 2017 was 1.4% and the annual change is projected to be 4.1% (http://countryeconomy.com/gdp/lithuania). I understood that Lithuania was not analyzed and mentioned in the article just because it does dot reach the 5 million people threshold (as all other baltic states too) but I think that there could hide huge opportunities too so I suggest to look into it. Some more numbers and presentations could be found here http://www.investlithuania.com/info-stop/downloads/ . Lithuania’s government is stable and its debt is relatively low https://tradingeconomics.com/lithuania/government-debt-to-gdp. There live many educated people. I personally suggest for investors to take a look into it too, not just write it off because it is small.

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