For the past decade, some of the hottest markets and best performing economies have been those countries called the BRICs: Brazil, Russia, India and China which have been at the forefront of global growth.
In 2001, their leadership was first recognized by Goldman Sachs analyst Jim O’Neill, who coined the term and defined a decadelong investment theme.
Now, O’Neill is urging investors to learn a new acronym, and begin a new search for potential profits in MIST: Mexico, Indonesia, South Korea and Turkey. While natural resources propelled growth in Brazil and Russia, and cheap labor sources benefited India and China, the MIST countries have more balanced economies.
As a group, MIST countries show similar economic characteristics to the BRICs. Debt is manageable in both groups and growth is strong for all eight countries.
Inflation is growing in almost all emerging economies, but MIST countries averaged inflation of only 5 percent last year compared to more than 7 percent in the BRICs. Unemployment is also lower on average for the new investment theme.
Stock market returns have lagged for the past year in the MIST group, perhaps indicating that investor expectations have not gotten ahead of the underlying fundamentals.
Almost 10 years ago, O’Neill spotted and named one of the best investments of the next ten years. If history repeats, we will be hearing more about the MIST.
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