Georgie Engelbrecht

By now we have covered on various ways of investing and from now a few of the same names will start popping up quite regularly. The beauty of investing though is that you don’t only have the choice of what instrument to invest in but also which market to use the instrument in. So much choice, which can also lead to so much confusion. I’ll try and help.

Despite ongoing troubles in Greece and surrounding Europe, indices across the globe seem insistent on going up. All the added liquidity from the European Central Bank, Federal Reserve, Bank of England, Bank of Japan and more imminent out of China has been like a red rag to a bull and as a result the market bulls have been rampant. Like a helium-filled, heart-shaped balloon though, what goes up must eventually come down, with or without popping first.

A classic love story

Before the pop though (if it comes), there must be some way to benefit out of the rise? Well, there are plenty but first, in honour of Valentine’s Day this week, let us have a quick look at a love story and one close to my heart at that. Don’t worry, I’m not going to start with “once upon a time”. “Once upon an Emerging Market” would be much more appropriate.

Tuesday Reuters published a story on the rise and allure of emerging markets. The article went on to say (in some pretty fancy jargon, littered with impressive statistics that I will save you the hassle of having to decipher) that emerging markets are once again investors’ favourite asset class.

Just a reminder of which markets are considered “emerging” and those that rank highly on the list of which to invest in; There is the acronym BRIC which is made up of the largest of these markets, Brazil, Russia, India and China. Often an S is tacked onto the end and that represents us, South Africa, (see why this is a story close to me heart). Others that are worth looking into are Canada, Malaysia, South Korea and Taiwan.

Fall in step with Germany

For those sceptics out there who are thinking; “this chick must be crazy, the Emerging Market Index plummeted more than 20% last year. Why should I put my money there when it looks like the debt troubles of the world are far from over?” I have the answer and you will be surprised to know that the problem sighted is also the answer. If the central banks have shown us one thing over the course of last year and the beginning of this year, it’s that they are not afraid to provide more cash.

In fact that seems to be their plan and they will continue to do it until it works. And to simplify things, boys love cars, girls love shoes and markets love liquidity. It is such a strong love that it makes investors giddy and ready to take risks and so investors’ appetites for the riskier emerging markets are on the rise.

There is more to it than just an increase in risk appetite though, you need an increase in Global Growth Optimism as well. If that has you worried, don’t be. Tuesday saw the biggest rise in German investor confidence in 10 months and if the Germans can be happy and confident despite having to bailout Europe, why shouldn’t we be too!

So you know where; emerging markets are the place for now but what instrument? You may remember the ETF from last week’s column on Gold; well you can use the exact same instrument. A UK based company; iShares, (no relation to iPad, iPod or any other apple product) offers ETFs on almost all of the countries I listed earlier. Once again, just be wary of currency risk and the tax consequences when dealing with foreign online platforms but otherwise feel free to catch the emerging market fever and spread the love.