CIVETS is the new BRIC

As I've mentioned before, I think global investors are too focused on India and China, and therefore are almost ignoring new and potential emerging markets.

Recently, a new group of countries (CIVETS) have been identified as the next big group of emerging markets, or more specifically the next BRIC. For those of you who dont know, BRIC stands for Brazil, Russia, India and China, and is also known as "The Big 4". The economies of these countries are experiencing massive global growth and therefore are pushing them into the future as being the next major global superpowers. Goldman Sachs has argued that, "since the four BRIC countries are developing rapidly, by 2050 their combined economies could eclipse the combined economies of the current richest countries of the world. These four countries, combined, currently account for more than a quarter of the world's land area and more than 40% of the world's population".


However, a new group consisting of less popular countries are being called the ones to watch in the near future for immense global economic growth. CIVETS stands for: Colombia, Indonesia, Vietnam, Egypt, Turkey, and South Africa.


According to the International Business Times, "The Economist coined the term CIVETS while setting out an argument that these countries are next in line to the emerging market superpower status. Predicting that these countries will power the next emerging market growth cycle, HSBC CEO said these will be the places to watch in the next ten years". The new focus on this group of countries is due to the fact that they all exhibit "large, young, growing populations. Each has a diverse and dynamic economy. And each, in relative terms, is politically stable". Most importantly, each country highly benefits from a growing consumer market as their middle class expands. Another reason CIVETS are “the new BRICS” is due to the potential that they have as second generation emerging economies. “Emerging markets will grow three times as fast as developed countries this year [2010]” - Michael Geoghegan, CEO of HSBC. For this, the center of gravity of the world is moving towards the East and the South (Asia and Latin America).

Although these CIVETS has been identified as the group of countries to watch, the GDP growth projection for the next 20 years for BRIC is 4.9%, where CIVETS falls just short of this with 4.5%. So if the GDP projection for CIVETS is less than BRIC, why the big fuss over this new group of potential countries?

Well according to sources, "the BRICs have exhausted their unique advantage of being an untapped market offering a potential windfall in returns, though risks could not be entirely ruled out. Their economies have now been assimilated with those of the advanced countries, and the growth outlook in these countries is increasingly getting priced into the investments".

Why Colombia is included in CIVETS:
Colombia has seen a lot of change over the past 20 years, and it has been working incredibly hard to change its image of being a violent, dangerous and drug infested country around the world. The dramatic change within Colombia has been achieved through pro-business policies which has helped the economy grow immensely as well as better government regulation to deal with guerrillas, paramilitary groups and drug trafficking. Much of this change can be attributed to former President Álvaro Uribe's actions.
According to Frank Holmes, CEO of U.S. Global Investors, Colombia "has become extremely easy for foreigners to invest in and develop the country. The country now ranks high on a global competitiveness survey for business sophistication, market size, and strength of investor protection". In fact Colombia is now more attractive to invest in than it´s neighbour Venezuela as well as Mexico.

Interesting Stats about BRIC:
According to a new report from Goldman Sachs, "China might surpass the US in equity market capitalization terms by 2030 and become the single largest equity market in the world. By 2020, US GDP might be only slightly larger than China's GDP. Together, the four BRICs may account for 41% of the world's market capitalization by 2030, the report said. Due to contraction of Japan's GDP in Q4 2010 by 1.1 percent from the previous quarter, so China's GDP surpassed Japan's GDP by $5.88 trillion and $5.47 trillion respectively and make China as Number 2 in Economy".

Read more at: http://www.ibtimes.com/articles/65324/20100924/civet-bric-colombia-indonesia-vietnam-turkey-egypt-south-africa.htm