Emerging markets (EM) revolution has the potential to be bigger than the industrial revolution. EM are experiencing high demand for goods from within their own country and abroad. McKinsey and Company estimate that EM will account for $30 trillion US by 2025. This is an opportunity for investors to take advantage of low evaluations in the EM space. A decade of returns have been lost due to the sub-prime mortgage crisis of 2008 and the current European debt crisis. By investing in EM investors have the ability to recoup their losses and grow their portfolio as developed countries growth slows. As McKinsey reported EM are “the biggest growth opportunity in the history of capitalism.”
China is leading the EM in their personal industrial revolution. When the UK had its industrial revolution they had a population of 10 million while China today has over a billion. As the middle class grows in China so will their salaries leading them to purchase goods for the first time. When the UK had its revolution it took 150 years with the advancement of technology that has been cut to 10-15 years.
The majority of Canadians assets are invested in Canada. Now is the time to start diversifying their portfolios and including EM in their holdings. Canadians can no longer afford to have a home bias as their portfolios have shrunk over the last decade. Now is the time to look for alternatives to grow their portfolios and EM is a great place to start.
Anderson, F. (2012, Aug 26). Consumption Revolution the” biggest growth opportunity since the industrial revolution”. Edmonton Journal. Retrieved August 27, 2012, from http://www.edmontonjournal.com/business/emergingmarkets/Consumption+revolution+biggest+growth/7135327/story.html