BRIC: Brilliant/Ridiculous Investment Concept
BRIC is Brazil, Russia, India, China — the acronym coined by Goldman Sachs banker Jim O’Neill 10 years back to describe the world’s biggest, fastest-growing and most important emerging markets. But according to Albert Edwards, Societe Generale‘s uber-bearish strategist, it also stands for Bloody Ridiculous Investment Concept. Some investors, licking their wounds due to BRIC markets’ underperformance in 2011 and 2010, might be inclined to agree — stocks in all four countries have performed worse this year than the broader emerging markets equity index, to say nothing of developed world equities.
For years, money has chased BRIC investments, tempted by the countries’ fast growth, huge populations and explosive consumer hunger for goods and services. But Edwards cites research showing little correlation between growth and investment returns. He points out that Chinese nominal GDP growth may have averaged 15.6 percent since 1993 but the compounded return on equity investments was minus 3.3 percent.
Retail volte face confirms India as BRIC that disappoints
Jim O’Neill, the Goldman Sachs banker who coined the term BRICs to capture the fast-growing emerging-markets quartet of Brazil, Russia, India and China, has fingered India as the BRIC that has disappointed the most over the past decade in terms of reforms, FDI and productivity. New Delhi’s latest decision to put on hold a landmark reform of its retail sector will only confirm this view.
The government’s backtracking on plans to allow foreign investment in supermarkets will not surprise those accustomed to New Delhi’s record on key economic reforms. But it means India’s weak performance on FDI receipts will continue and that’s bad news for the worsening balance of payments deficit. Speaking of the retail volte face, O’Neill said: ”They shouldn’t raise people’s hopes of FDI and then in a week, say, ‘we’re only joking’”.
India: the BRIC that has disappointed – Goldman’s O’Neill
LONDON (Reuters) – Growth in all four BRIC economies has surpassed expectations in the decade since the term came into existence but India’s record on productivity, FDI and reform has been the most disappointing, the chairman of Goldman Sachs Asset Management Jim O’Neill said on Tuesday.
O’Neill, who coined the term, BRIC, in December 2001 to jointly describe the four biggest developing economies — Brazil, Russia, India and China — was speaking at the London leg of the Reuters 2012 Investment Outlook Summit.
Funds bet on euro survival, 2012 risk rally
LONDON (Reuters) – Europe’s single currency will most likely survive its raging existential crisis intact, asset managers said on Monday, adding that even a roadmap for euro stability should be enough to encourage a rally in world markets next year.
Speaking at the Reuters 2012 Investment Outlook Summit, taking place in New York, London and Hong Kong this week, asset managers from some of Europe’s biggest financial firms reckoned the risk of a calamitous euro break-up was significant but still not high enough to send investors to ground completely.
HSBC Wealth sees double-digit 2012 equity returns
LONDON (Reuters) – Cheap valuations offer potential for double-digit returns on global equities in 2012, with emerging markets likely to do especially well, the CIO of HSBC’s wealth management division said on Monday, adding he had raised equity exposure at the expense of gold.
Alec Letchfield, CIO of wealth management at HSBC Global Asset Management, also told the Reuters 2012 Investment Outlook Summit that he favored hedging tail risks stemming from the euro zone crisis via a diversified portfolio, skewed towards equities.
World stocks extend gains after U.S. data
LONDON (Reuters) – World stocks extended gains on Friday, on track for their biggest weekly gain since November 2008 as a key U.S. jobs release was in line with expectations, reinforcing the view that recovery in the world’s biggest economy is gaining momentum.
Markets have posted strong gains after central bank moves earlier this week cut funding costs for banks and also signs that euro zone policymakers are working hard to resolve a compromise deal ahead of a December 9 summit, viewed as make-or-break for the 12-year old single currency bloc.
World stocks extend gains ahead of U.S. data, euro summit
LONDON (Reuters) – World stocks extended gains on Friday and looked set for the biggest weekly rise since mid-2009 thanks to coordinated central bank action that cut the cost of money market funds.
There were also widespread investor hopes that a key European summit next week could finally yield a concrete solution to the euro debt crisis.
World stocks extend gains ahead of U.S. jobs data
LONDON (Reuters) – World stocks extended gains on Friday and looked set for the biggest weekly rise since mid-2009 thanks to coordinated central bank action that cut the cost of money market funds.
There were also widespread investor hopes that a key European summit next week could finally yield a concrete solution to the euro debt crisis.
Stocks extend gains ahead of US data, euro summit
LONDON, Dec 2 (Reuters) – World stocks extended gains
on Friday and looked set for the biggest weekly rise since
mid-2009 thanks to coordinated central bank action that cut the
cost of money market funds.
There were also widespread investor hopes that a key
European summit next week could finally yield a concrete
solution to the euro debt crisis.
India: the odd BRIC out
China moved to ease policy this week via a reserve ratio cut for banks, effectively starting to reverse a tightening cycle that’s been in place since last January. Later the same day, Brazil’s central bank cut interest rates by 50 basis points for the third time in a row. Both countries are expected to continue easing policy as the global economic downturn bites. And last week Russia signalled that rate cuts could be on the way.
That makes three of the four members of the so-called BRIC group of the biggest emerging economies. Indonesia, the country some believe should be included in the BRIC group, has also been cutting rates. That leaves India, the fourth leg of the BRICs, the quartet whose name was coined by Goldman Sachs banker Jim O’Neill ten years ago this week. India could use a rate cut for sure. Data this week showed growth slowing to 6.9 percent in the three months to September — the slowest since September 2009. Factory output slowed to a 32-month low last month, feeling the effects of the global malaise as well as 375 basis points in rate increases since last spring. No wonder Indian stocks, down 20 percent this year, are the worst performing of the four BRIC markets.
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