It’s that time of year again when millions of Brits jet off to sunny locations in Europe and across the globe.
It seems like this year, your portfolio should be doing the same thing! Over the last few months, emerging markets have shown their strengths and it seems like now might be a good time to invest outside of the UK and US.
In this week’s column, I wanted to highlight the potential benefits of adding international stocks to your portfolio and share 3 emerging markets that I’ve got my eye on.
What’s going on in emerging markets?
So, why am I looking outside of the UK and US? Well, emerging markets have had a particularly good year so far. And the same can’t be said for the US or the UK!
For those who don’t know, ‘emerging markets’ is the name given to an economy that has seen considerable growth and possesses many of the same characteristics that can be seen in a developed economy.
These markets often have significant growth potential and can be very lucrative – if you know what to look for!
In 2024, several emerging markets have made significant strides.
India’s economy has seen over eight percent growth for three consecutive quarters thanks to advancements in manufacturing and increased investment activity.
Elsewhere, Indonesia has seen GDP growth of 4.91 percent. This is largely due to dwindling rates of inflation which have made it easier for consumers to spend.
Similarly, China’s economic growth is predicted to remain at around five percent in 2024. These predictions come after the country saw strong Q1 GDP data which was driven by increased investment.
In comparison, GDP in the UK increased by just 0.7 percent in Q1 of 2024 and the US saw an even smaller growth rate of 0.3 percent.
Of course, it is important to take into consideration the fact the the UK and US are not ‘emerging markets’ which means that both economies have less room for growth.
However, I still think it’s worth considering your options!
Benefits of investing overseas
A lot of investors shy away from emerging markets because they can seem a little bit daunting at first. But, investing in these markets is no different from buying UK stocks and shares – you do the same research and all the major share-dealing platforms offer stocks and funds from all over the world.
Plus, doing so can come with a few excellent benefits! In particular, investing overseas is a great way to diversify your portfolio.
Diversification is the process of spreading your investments across different instruments rather than keeping everything in one place. This helps to reduce risk by minimizing the impact of big losses.
By diversifying with emerging markets, you can outweigh any losses that might be felt by UK and US markets (especially with the upcoming presidential election!).
Furthermore, investing in emerging markets is a good way to gain exposure to economies that have a lot of room for growth. This makes them an appealing option for long-term investors.
Three emerging markets I’ve got my eye on
So, what emerging markets are worth considering in 2024? Here are 3 that I’ve got my eye on!
India
In my opinion, India is one of the most exciting emerging markets right now. The economy has managed to surpass predictions for months and doesn’t seem to be slowing down any time soon.
Between 2023 and 2024, the economy grew by 8.2 percent. The growth was driven by high demand for the country’s goods along with high levels of industrial activity.
Some of India’s main exports include clothing, jewellery, petroleum products, and medicines – to name a few. India also has the second-largest population in the world and has the fourth-largest consumer market.
Guyana
Guyana is currently the fastest-growing economy in the world. In 2023, the country’s GDP grew by an astonishing 38 percent!
This growth is mainly driven by rising oil production, which has given the country a significant boost. The recent growth has seen Guyana become the 3rd richest country in South America and the 63rd richest country in the world.
At the moment, it seems like Guyana is having a great streak! However, investors should be wary of potential inflation and political volatility.
Vietnam
Another country that I’m watching right now is Vietnam. The current growth forecast for 2024 is 5.5 percent and this could rise to six percent by 2025.
The interesting thing about Vietnam is that growth is largely dependent on foreign direct investment. The country has benefitted from global trends and seems to be relatively resilient.
Another driver of economic growth in Vietnam is the country’s thriving agriculture sector which has ensured food security. Although Vietnam’s growth may not be as dramatic as Guyana’s or India’s, I still think it is one to watch!
It is worth noting here that economic growth is not set in stone. Political events and global crises can have a significant impact on the strength of a country’s economy – we all saw this during the pandemic!
Therefore, it is important to do your research before making any investment decisions. Also, remember to diversify so that your portfolio is not dependent on one economy!
If you are interested in investing in emerging markets, we recently published a great article about 3 India ETFs to consider on MoneyMagpie.com.
Stay informed
Things are moving fast in the developing world and countries, and sectors, that seem quiet can suddenly burst into activity. So stay informed about what is happening in the markets and in different countries around the world by signing up to our FREE investing newsletter here.
It comes out once a fortnight and is full of tips and information about shares, cryptocurrencies, bonds, property, pensions and quirky alternative investments. You can’t afford not to get it!
