Investors re-open the newly industrialized countries

Vladimir Miroshnikov sees the light at the end of the tunnel: “the Coming months though and will be more difficult, but mid-year things, probably, again will improve”, — says the Manager of the largest Russian avtotormoza group Rolf. Miroshnikov is not alone with his optimism about the development of the Russian economy.

Many international investors again dare to buy stocks and bonds from a giant Eastern European Empire. Other newly industrialized countries, such as India or Brazil also once again attracting the interest of players in the financial market. However, they are not interested in growing the economy. Too vague, how will the world trade with the new US President Donald trump.

The price of oil driven economy


“In 2017, we expect a higher growth of profits of new industrial countries”, — says an expert on currency Commerzbank Peter Kinsella (Peter Kinsella). Experts expect that the rising oil prices first and foremost, the Russian economy will grow this year by more than 1%, and in 2018 even 2%. Although it is still far from the growth rate before the financial crisis, but in 2015, Russia’s GDP fell by 4%.

Leading investment banks such as JPMorgan, UBS and Deutsche Bank recommend in any case to re-invest in Russia. The country is on the path to ozdorovleniyu and growth, emphasized in Goldman Sachs. “Many companies, for the most part have adapted to the new conditions, and important new industrial countries began political reforms in Economics,” says Wolfgang Ficus (Wolfgang Fickus), member of the investment Committee at the Fund-provider, Comgest, which has invested in a new industrial countries more than half at its disposal funds in the amount of about 20 billion euros. Especially in India, one of the fastest growing economies in the world, Ficus sees a lot of potential. Brazil has to concentrate on his reforms after years of political turbulence, says Rabobank economist of the Bank of Boonstra WIM (Wim Boonstra). “There are first encouraging signs,” he says. In 2017, experts expect in the largest South American country, the growth of 0.8% with an increasing trend.

To evaluate separately each country

However, the feeling of confidence dependent on the region. “We expect significant konyunkturno differences between individual countries, and investors should watch carefully where they are investing,” emphasizes Helen Williamson (Helene Williamson), head of credit transactions under the new industrial countries in investment society First State. According to her, special voltage is how the US administration if trump will be able to inflict damage to countries such as Mexico or China. Because trump sees risks for the United States in global free trade and has already repeatedly declared intention to impose punitive duties on cheap imports. “In principle, the winning trump in the election can be regarded as a blow to globalization in its current form,” says the specialist currency Kinsella.

After the unexpected election victory in early November of this 70-year-old politician is the currency of many newly industrialized countries depreciated. The MSCI index for these countries lost a few days of almost 8%. Especially the large uncertainty about the U.S. neighbor Mexico. In 2016 the economy has shrunk, and this year experts expect a new negative. The same applies to peso, which depreciated after the victory trump almost 20%. “But if it turns out that political action trump will be more pragmatic than this fear now, it is countries such as Mexico can win,” admits the expert from the First-State Williamson.

Caution is needed


In contrast to other industrializing countries in Russia things went up after it became clear that the White house will move trump to attract the attention of their friendly statements against Russia. Stock index in Moscow rose by almost 20% and is at its highest level since the autumn of 2014. The Russian ruble is worth only $ 60, which was not for a year and a half. “Russia can hope that when the trump sanctions are lifted,” says the economist of Rabobank Boonstra. In addition, Russia benefits from a newly rising oil prices. Brent is in the prospect of reducing the volume of extraction of raw materials again, almost $ 60 per barrel, more than double in early 2016.


However, because of dependence on oil prices, experts warn against ill-considered investments in Russia. Problematic are also still high levels of corruption and state involvement in the Russian enterprises, which is 70%, that is two times higher than in 2005. Boonstra advises to be careful especially when transactions are long-term: “In the long term, the Outlook for Russia is not so positive.”

Skepticism remains


Further appreciation of the dollar and higher interest rates may also increase pressure on newly industrialized countries. Flossbach Bert (Bert Flossbach), co-founder of the Cologne investment company Flossbach von Storch, belongs therefore to the stock of the newly industrializing countries is still restrained because corporate governance in developing countries is often very poor. “You just don’t know what You buy there” – said the expert edition of Fondsprofessionell. In the long term will lose a little without the availability of shares of newly industrialized countries.