Who Are the Next 11?
By Ron Rowland
Everyone is making 2010 forecasts. So today I’ll jump on the bandwagon and share one of mine with you:
In 2010 you’ll hear a lot more about the “Next 11.”
The Next 11 (N-11) is a list of fast-growing countries identified by Goldman Sachs as potentially good investments in the coming years. However, before I tell you where in the world can you find them, I should probably tell you about the First 4 — the so-called “BRIC” countries.
BRIC is an acronym coined by Goldman Sachs a few years ago to describe four top emerging markets: Brazil, Russia, India, and China. These countries have a huge part of the world’s economy and natural resources. And together, they account for about 25% of the world’s land mass and 40% of the global population.
As big and influential as they are, however, the BRICs are already well-known among professional investors. And that’s where the Next 11 countries come in – they’re the next big growth stories.
While they aren’t on the scale of the BRIC nations, the Next 11 countries all have large populations. Indonesia is the largest at about 229 million, while South Korea is the smallest with around 48 million.
More important, their populations are growing — not shrinking as is the case in many developed nations. Other things being equal, more people usually means more business opportunities.
When you combine a good-size, growing population with a modern industrial base you get a critical mass: The ability to produce consumer goods, and the consumers who can afford to buy them. Having natural resources, such as oil, in your back yard helps too.
All of this creates the potential for major consumer and business growth. And the investment opportunities — for those who are patient and do their homework — could be enormous!
Here is a complete list of the Next 11, from West to East:
• South Korea
I’m surprised that Mexico is the only country in the Americas present on the Next 11 list. I personally believe some countries like Chile, Peru, and Argentina are also capable of showing tremendous growth in the decades ahead. But then again, it’s Goldman Sach’s list — not mine.
Are the Next 11 countries “Emerging Markets?” That depends how you define the term. South Korea, for instance, is as modernized as the U.S. and France. The same holds true for parts of the others. The point isn’t where they are now. The point is where they are going in the long run — and from everything I’m seeing, the answer is bound to be up!
How to invest in the Next 11
I wish I could tell you about an exchange traded fund (ETF) that gives you easy access to the top companies in the Next 11 countries.
Unfortunately, none exists at the moment. Although, an index provider for fund sponsors, Structured Solutions AG, already has three Next-11 related indexes up and running. So we’re sure to see ETFs based on these indexes hit the market soon.
Meanwhile, you can get part way there with single-country ETFs that provide exposure to some of the Next 11 markets. Consider checking out funds like iShares MSCI Mexico (EWW), iShares MSCI South Korea (EWY), iShares MSCI Turkey (TUR), Market Vectors Indonesia (IDX), and Market Vectors Vietnam (VNM).
If you buy any of these ETFs, be sure to invest only a small slice of your portfolio. The long-term prospects are great for all of them, but in the meantime you could see some huge short-term swings.
We cover the BRIC countries, the Next 11, and other international ETF trends in our 21st Century Superpower Trader premium service. Subscribers receive specific buy and sell recommendations for the fastest-moving global markets.
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Money and Markets (MaM) is published by Weiss Research, Inc. and written by Martin D. Weiss along with Nilus Mattive, Claus Vogt, Ron Rowland, Michael Larson and Bryan Rich. To avoid conflicts of interest, Weiss Research and its staff do not hold positions in companies recommended in MaM, nor do we accept any compensation for such recommendations. The comments, graphs, forecasts, and indices published in MaM are based upon data whose accuracy is deemed reliable but not guaranteed. Performance returns cited are derived from our best estimates but must be considered hypothetical in as much as we do not track the actual prices investors pay or receive.