I recently returned from India, a nation where an incredible 600 million people are under the age of 25. That's nearly double the entire population of the U.S.!
What's amazing about that figure is that, unlike the 1970s when India had no global footprint, today's generation is increasingly gaining access to the Internet.
Social networking platforms are seeing an incredible growth trajectory in India, as one of the fastest growing markets. In fact, by 2016, the country is set to be Facebook's largest population in the world, according to the BBC.
If the sweeping economic reforms planned by Chinese leaders during the Third Plenum can be our guide, it looks to be a promising decade for global investors. Details released recently confirmed President Xi Jinping's concerted efforts to move China toward a market-based economy that mirrors the West.
The plan's comprehensive nature and the level of clarity evidently pleased investors, as many Chinese stocks experienced a pop. We're pleased U.S. Global Investors' China Region Fund (USCOX) also participated:
More than a decade ago, the acronym, BRIC was coined. Most investors know the countries it stands for, but few remember the name or background of the man who came up with the term.
It was back in 2001 when Jim O'Neill, formerly of Goldman Sachs, grouped Brazil, Russia, India and China to represent the economic shift away from developed countries toward emerging nations. According to a 2010 story in the Financial Times, he came up with the bold prediction that "by 2041 (later revised to 2039, then 2032) the BRICs would overtake the six largest western economies in terms of economic might."
I wouldn't say the nail is in the emerging market coffin quite yet. During the financial crisis, the EMSCI Emerging Market Index (EEM) was left for dead (down -50% in 2008) before resurrection in 2009 and 2010 (up +74% and +16%, respectively). For the last two years however, the EMSCI index has underperformed the S&P 500 Index massively by more than -30%. Included in this international index are holdings from China, Russia, India, Brazil, South Korea, and South Africa, among others.
On a recent trip to Europe we participated in a forum in Milan of five stock picking organizations. Two were from Brazil, one was from Malaysia and one was picking stocks inside China via the Shanghai Stock Exchange. We believe what they said was an enticement to investors for the purpose of getting them excited about stocks in their country. To us, this reveals a great deal about where prices in emerging stock markets and commodities are headed over the next five to seven years.