Jim O’Neill, the clever Goldman Sachs analyst who came up with the term “BRIC” a decade ago, has cooked up a new, catchy investment theme. Get ready for the “N-11”, shorthand for the “New 11”, a gaggle of early stage emerging markets who will become the inheritors of the BRIC’s high growth rates. The basic idea is to surf a global wave of coming GDP and per capita income rises. The N-11 breaks down into four sub categories:
High Income: South Korea
Upper Middle Income: Mexico, Turkey
Lower Middle Income: Egypt, Iran, Pakistan, Indonesia, Nigeria, Philippines
Low Income: Bangladesh, Vietnam
Jim has come up with a basket of indicators measuring the attractiveness of each country that includes liquidity of the financial system, bank deposits, central bank assets, private credit, stock market capitalization, outstanding currency, public and private debt, and for some countries, aid inflows. Before you rush out and load the boat with Iranian names, let me tell you that investing in some of these places is easier said than done. This is really a call on economies, and not local stock markets.
Only a couple have ETF's. I have already recommended in the past, with great success, South Korea (EWY) (click here for the piece), Vietnam (VNM) (click here and click here for more info on Vietnamese stock markets), and Indonesia (IDX) (click here). Jim says that the best value for money in terms of financial development is Vietnam and Egypt.
Watch this space. I am going to be posting on the other countries in this list as liquid vehicles become available. In a few years you are going to become as weary of hearing about the N-11 as you are about BRIC's today. To read the full eight page report from Goldman Sachs, please click here.
Looking for Those Great Emerging Market Bargains