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Why Are Investors
Leaving Emerging
Markets?
By www.ProfitableInvestingTips.com
http://profitableinvestingtips.com/profitable-investing-tips/why-are-investors-leaving-emerging-markets
Remember when the BRICS
nations were all set to surge into the
forefront of the global economy?
http://profitableinvestingtips.com/profitable-investing-tips/why-are-investors-leaving-emerging-markets
Brazil, Russia, India, China, and South
Africa were all seeing spectacular
economic growth and attracting huge
amounts of foreign direct investment.
http://profitableinvestingtips.com/profitable-investing-tips/why-are-investors-leaving-emerging-markets
These nations are still substantial
actors on the world stage but their
growth has slowed and in some
cases reversed course.
http://profitableinvestingtips.com/profitable-investing-tips/why-are-investors-leaving-emerging-markets
Investors have been pulling their money
out of these markets and putting it into
the USA, Europe, and Japan.
http://profitableinvestingtips.com/profitable-investing-tips/why-are-investors-leaving-emerging-markets
So, what happened? Why are
investors leaving emerging
markets?
http://profitableinvestingtips.com/profitable-investing-tips/why-are-investors-leaving-emerging-markets
China Moves to Adjust Its
Economy
http://profitableinvestingtips.com/profitable-investing-tips/why-are-investors-leaving-emerging-markets
China helped lead the way out of
the financial crisis and the Great
Recession by doubling down on
their investments in both
infrastructure and industrial
capacity.
http://profitableinvestingtips.com/profitable-investing-tips/why-are-investors-leaving-emerging-markets
Nations, like Brazil, saw huge benefits
as China’s industrial machine
consumed more and more raw
materials.
http://profitableinvestingtips.com/profitable-investing-tips/why-are-investors-leaving-emerging-markets
The price of oil skyrocketed
making not only OPEC happy but
also Russia and Brazil.
http://profitableinvestingtips.com/profitable-investing-tips/why-are-investors-leaving-emerging-markets
China had been expanding its state-run
economy for years and steadily
increasing its customer base to span the
globe.
http://profitableinvestingtips.com/profitable-investing-tips/why-are-investors-leaving-emerging-markets
But, as large as the world economy
is, it is finite.
http://profitableinvestingtips.com/profitable-investing-tips/why-are-investors-leaving-emerging-markets
And, the industrialized economies of
the world got tired of seeing jobs and
whole industries pivot to China.
http://profitableinvestingtips.com/profitable-investing-tips/why-are-investors-leaving-emerging-markets
China had over-built its industrial
base and now saw a substantial
slowdown in growth, closing
factories, and even labor unrest.
http://profitableinvestingtips.com/profitable-investing-tips/why-are-investors-leaving-emerging-markets
A slower Chinese economy needed
fewer raw materials and the emerging
markets suffered.
http://profitableinvestingtips.com/profitable-investing-tips/why-are-investors-leaving-emerging-markets
Rich Chinese saw the slowing of
China’s miracle expansion and
started a capital flight that still
threatens the country’s economy.
http://profitableinvestingtips.com/profitable-investing-tips/why-are-investors-leaving-emerging-markets
China’s economy is now under pressure
due to a trade war with the USA.
http://profitableinvestingtips.com/profitable-investing-tips/why-are-investors-leaving-emerging-markets
Russian Adventurism
Brings Sanctions
http://profitableinvestingtips.com/profitable-investing-tips/why-are-investors-leaving-emerging-markets
In 2014 we wrote about investing in
Russia after the annexation of
Crimea and support of separatists in
Ukraine in parts one, two,
and three.
http://profitableinvestingtips.com/profitable-investing-tips/why-are-investors-leaving-emerging-markets
Russia was hurt by the fall in oil
prices that year and is still hurting.
http://profitableinvestingtips.com/profitable-investing-tips/why-are-investors-leaving-emerging-markets
Then, the EU and USA levied
economic sanctions that greatly
reduced investment in Russia and
the ability of Russians to use the
international banking system.
http://profitableinvestingtips.com/profitable-investing-tips/why-are-investors-leaving-emerging-markets
With Russia meddling directly in
elections in Europe and the USA, it is
unlikely that these sanctions will be
lifted any time soon.
http://profitableinvestingtips.com/profitable-investing-tips/why-are-investors-leaving-emerging-markets
Political and Economic
Chaos in both Brazil and
South Africa
http://profitableinvestingtips.com/profitable-investing-tips/why-are-investors-leaving-emerging-markets
When the BRICS first met
officially in 2009 the Brazilian
president, Lula de Silva, was
commonly called the most popular
politician on the planet.
http://profitableinvestingtips.com/profitable-investing-tips/why-are-investors-leaving-emerging-markets
Today he is due to start serving a 12
year prison term for his involvement in
governmental corruption.
http://profitableinvestingtips.com/profitable-investing-tips/why-are-investors-leaving-emerging-markets
Jacob Zuma was the president of
South Africa and was recently
forced out of office by his own
political party.
http://profitableinvestingtips.com/profitable-investing-tips/why-are-investors-leaving-emerging-markets
Along the way the focus was no longer
the spectacular growth of Brazil
but Brazilian bankruptcy.
http://profitableinvestingtips.com/profitable-investing-tips/why-are-investors-leaving-emerging-markets
South Africa’s GDP was $400
Billion in 2011 and $295 Billion in
2017.
http://profitableinvestingtips.com/profitable-investing-tips/why-are-investors-leaving-emerging-markets
Trade War and a
Strengthening US Dollar
http://profitableinvestingtips.com/profitable-investing-tips/why-are-investors-leaving-emerging-markets
Trump did not start a trade war with
nations like Brazil.
http://profitableinvestingtips.com/profitable-investing-tips/why-are-investors-leaving-emerging-markets
But, if and when a trade war slows
economic production in China, Europe,
or anywhere, the emerging markets get
hurt.
http://profitableinvestingtips.com/profitable-investing-tips/why-are-investors-leaving-emerging-markets
A couple of years ago we wrote
about the resource curse of boom
and bust cycles.
http://profitableinvestingtips.com/profitable-investing-tips/why-are-investors-leaving-emerging-markets
Nations like Brazil, Russia, and South
Africa are rich in natural resources.
http://profitableinvestingtips.com/profitable-investing-tips/why-are-investors-leaving-emerging-markets
When demand goes up they prosper
and when demand goes down they
suffer.
http://profitableinvestingtips.com/profitable-investing-tips/why-are-investors-leaving-emerging-markets
And, another result of the trade war
ramping up is that the US dollar is
getting stronger.
http://profitableinvestingtips.com/profitable-investing-tips/why-are-investors-leaving-emerging-markets
The dollar is perceived to be a safe
haven currency and the US Federal
Reserve is steadily raising interest
rates.
http://profitableinvestingtips.com/profitable-investing-tips/why-are-investors-leaving-emerging-markets
Investors are leaving emerging markets
to flee to dollar-denominated assets,
and to flee to the USA where markets
are still healthy.

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Why Are Investors Leaving Emerging Markets?