• A growing consumer market and governmental aid have increased merger and acquisition activity in Brazil, reports Elzio Barreto for Reuters. Agribusiness, finance and consumer retail sectors are seeing more takeovers, corporate restructurings and ventures. The largest deal so far this year is the $21 billion-a-year tie-up between Cosan, producer of sugar and ethanol, and Royal Dutch Shell Plc.
• Brazil’s Central Bank stated that the country’s economic rebound is pressuring consumer prices, which many consider a good signal that interest rates might increase no later than April, writes Andre Soliani Costa for BusinessWeek. Some traders are betting that the Central Bank will raise rates by 0.25% to 9% as soon as next month. The Central Bank has projected a 5.8% economic expansion for the year. [Coping with Risk in Latin America.]
• A recent Getúlio Vargas Foundation survey found that there was an upward shift in Brazil’s income levels, according to Isabela Vieira for Brazzil Mag. The Brazilian income tier is looking less like a pyramid and more like a diamond-shape, with a slight contraction at the bottom and a distending middle class.
• Brazilian bank Itau Unibanco Holding SA (NYSE: ITUB), Brazil’s largest private-sector bank, is focusing on domestic expansion, opening 150 agencies across the country this year, reports Rogerio Jelmayer for The Wall Street Journal. Furthermore, the bank expects to expand its credit portfolio by around 20%. Banco Bradesco S/A (NYSE: BBD), Brazil’s second-largest private bank, wants to invest $2.27 billion in its operations this year. Banco do Brazil SA, the country’s largest bank in terms of assets, has also engaged in acquisitions to help maintain its presence as a market leader.
• Better-than-expected soybean production may a decent boost to Brazil’s thriving economy in 2010, comments Nathaniel Parish Flannery for Emerginvest. The Agriculture Ministry expects that Brazil, the world’s second largest soybean producer, could benefit from greater rain fall this year. Brazil’s Finance Minister, Guido Mantega, forecasts an economic expansion of 5.2% in 2010. [Brazil Shows Its Might.]

For more information on Brazil, visit our Brazil category.

• iShares MSCI Brazil (NYSEArca: EWZ)

• Market Vectors Brazil Small Cap (NYSEArca: BRF)

• iShares MSCI BRIC (NYSEArca: BKF): Brazil is 27.4%

• Claymore/BNY BRIC (EEB): Brazil is 52.8%

• SPDR S&P BRIC 40 (NYSEArca: BIK): Brazil 23.9%

Max Chen contributed to this article.

In 2001, Goldman Sachs released a report stating that the economies of Brazil, Russia, India and China were expected to become the main drivers of economic growth for the world in the coming decades, says Desicritics. Has that prediction come to pass? (BRIC ETFS to choose from).

Here is a look at the four economies:

Brazil: Brazil has been surpassing expectations and surprising investors around the world. Impressive economic growth, a booming commodity sector and the country’s popular government are receiving worldwide attention, reports Juan Ferero for NPR. The growing middle class and the innovative state programs are all  part of the movement against poverty, and is an example for all developing nations. (More on Brazil).

Russia: High oil prices are the foundation to Russia’s wealth, and as long as oil prices remain elevated it could solidify the country’s gains. But that’s also a risk to the country; Russia will need to diversify into other areas for true long-term stability. Sujata Rao and Sebastian Tong for Reuters report that gross domestic product could grow by 3.1% in 2010 against a previously forecast 1.6 %, while 2011 could see an increase of 3.4%. (Why Russia could see growth).

India: Mehul Srivastave for BusinessWeek reports that India’s $1.2 trillion economy may be among the world’s first to come roaring out of the global recession, as government data showed it grew by 7.9% in the third quarter. Industry grew 9.2%, compared with 5.1% in the year-earlier quarter. Many are thinking that the worst may be behind India, which boasts a young, entrepreneurial population. (Seven more ways to access BRICs).

China: China is considered to be not just an economic leader among the BRICs, but a leader in the entire world. The country has a growing consumer base, a rising middle class and cities that are building up rapidly, positioning the large nation to become an economic superpower. If all goes according to plan, China could be on its way to becoming the world’s second-largest economy, behind the United States and surpassing Germany and Japan on the way. (China’s reverse brain drain; our loss?)

As more evidence of the strength of the BRICs, According to Denis Dymokin for Forbes, the four BRIC countries are discussing a possible increase in their financial contribution to the International Monetary Fund (IMF). (More on the BRIC ETFs.)

Visit our special report on the BRICs for a complete list of all the options for investing in these growing economies.

For more stories about BRIC countires, visit our BRICs  category.

Although the pace may eventually slow down, Barron’s reports that emerging markets still have room left to grow in the long haul. And for the time being, they may be the place to hide out as developed markets still work toward normalcy. In the near-term, growth rates in developed nations are expected to be lackluster, and much less robust than those in the developing world’s. (What you’re missing when you’re not globally invested).

Countries that are resource rich and developing are stockpiling cash and shoring up their balance sheets for a strong recovery and a growth spurt unlike any seen before. Earnings and  economic activity have been revived. Morgan Stanley feels that earnings in emerging markets have bottomed in the third quarter and they’re now set to climb again. (Why frontier markets could be even bigger).

For more stores about emerging markets, visit our emerging markets category.

There are a variety of ways to play emerging markets. There are broad funds, such as iShares MSCI Emerging Markets (NYSEArca: EEM), Vanguard Emerging Markets (NYSEArca: VWO) and iShares MSCI EAFE Index (NYSEArca: EFA).

There are funds that focus on regions, such as Claymore/BNY Mellon BRIC (NYSEArca: EEB) and BLDRSAsia 50 ADR Index (Nasdaq: ADRA).

Finally, there are single-country funds, such as iShares MSCI Brazil (NYSEArca: EWZ) and Market Vectors Vietnam (NYSEArca: VNM).

Keep in mind that the narrower you get in your exposure to emerging and frontier markets, the higher your risk will be. Be sure to have an entry and exit strategy before you invest. (How to follow trends).

India’s economy is forecast to see “definite signs of recovery” in the second half of the current fiscal year, reports The Economic Times. Growth is predicted to be in the 6% to 6.5% range. But there are a number of investors who want to expand their horizons beyond the BRIC countries.

While BRIC countries have been growing and moving, the expansion of other developing nations is widening the choices investors have. For instance, Vietnam, Thailand and Turkey have all gone through growth that is every bit as significant, explains Don Dion for TheStreet.

While the idea of Vietnam or South Korea may appear refreshing if you’re looking for some fresh blood for your portfolio, it’s key to remember that emerging markets entail risk. The best thing to do is watch on the sidelines for the moving averages, then get in slowly. If you enter with a discipline and a sell point, you’ll check your emotions at the door.

As Don Dion for The Street explains, these funds can be volatile, so a small asset allocation to these funds is appropriate if you plan to take a buy-and-hold approach.

The consideration that goes into single-country ETFs is that as an investor, you are subject to politics, social traumas and reforms, and of course, concentration in a particular sector. This re-iterates the need for every investor to brush up and do some research before going in.

A sample of BRIC ETFs, and a couple alternatives:

• iShares MSCI BRIC (NYSEArca: BKF): up 66.9% year-to-date
• Claymore/BNY BRIC (NYSEArca: EEB): up 66.1% year-to-date
• Market Vectors Russia (NYSEArca: RSX): up 104.3% year-to-date
• iShares MSCI South Korea (NYSEArca: EWY): up 67.3% year-to-date
• Market Vectors Vietnam (NYSEArca: VNM): up 10% since Aug. 14 inception
• iShares MSCI Turkey (NYSEArca: TUR): up 84.3% year-to-date
• iShares MSCI Thailand (NYSEArca: THD): up 73.6% year-to-date

For more stories about BRIC ETFs, visit our BRIC category.

India’s Meteorological Department has estimated rainfall during the monsoon season this year will be substantially below the long-term average. This is going to  damage existing crops and reduce future plantings. The government has stepped in, however, and will rely upon imported food to even out the supply and demand equation, report Mukesh Jagota and Abhrajit Gangopadhyay for The Wall Street Journal.

Rainfall is around 26% below average, and the full impact of this won’t be known until the harvesting starts. In turn, rising food costs have surfaced, and the possibility of huge government borrowing may crowd out long-term investment, which poses major challenges for India’s economic rebound.

Kartik Goyal and Cherian Thomas for Bloomberg reports that India this month signed a free-trade accord with South Korea and the 10-member Association of Southeast Asian Nations as it attempts to reduce dependence on the recession-hit U.S. and Europe. India depends on these countries for about 40% of merchandise exports.

New markets in Africa and Latin America are being explored, as India is also extending a tax refund to exporters.

• PowerShares India (PIN): up 57.2% year-to-date



• WisdomTree India Earnings (EPI): up 68.4% year-to-date

For more stories about India, visit our India category.

Emerging markets are in a position to strengthen themselves against the developed world.  Of the emerging nations, China is by far the largest and recently its stock market capitalization surpassed that of Japan’s, which is the second-largest economy in the world. China is expected to surpass Japan to be the second largest econ0my next year.

Curtis Mewbourne, managing director at PIMCO states that emerging markets, especially Brazil, Russia, China and India, known as the BRIC nations, have several factors in their favor:

• In order for a nation to become and remain dominant, it must reduce its dependency on others. Mewbourne states that the BRICs all share characteristics that could potentially enable them do this.  These include low labor costs, large populations and low levels of consumer debt.
• What makes these nations even more attractive is that global consumption growth in them is expected to grow exponentially.  A study by Credit Suisse indicates that by 2020, non-Japan Asia is expected to make up 32.3% of global consumption.
• Emerging nations, especially China, are one of the largest holders of U.S. debt and indirectly control the value of the U.S. dollar – a powerful tool.

There’s an increasing number of ways for investors to grab exposure to emerging markets. You can invest by broad market, region or single country. Two examples are:

• iShares MSCI Emerging Markets Index (EEM): up 46.4% year-to-date

• Claymore/BNY Mellon BRIC (EEB): up 55.1% year-to-date

For more stories on emerging markets, visit our emerging markets category.

Kevin Grewal contributed to this article.

The idea of Brazilian companies going international is a phenomenon that really only gathered steam this decade.

According to Luis Afonso Lima and Octavio de Barros f0r Latin Business Chronicle, from 2000 to 2003, outward foreign direct investment (OFDI) averaged $0.7 billion a year. Over the four-year period 2004-2008, this average jumped to nearly $14 billion. In 2008 alone, OFDI jumped to $7 billion.

Recent data shows about 887 Brazilian companies have invested overseas, and foreign direct investment may only grow as the global economy improves. Today, Brazilian OFDI can be found in 78 countries.

The internationalization of Brazilian companies is dominated by the private sector, although state-owned enterprises also play a role. Petrobas is a good example; the company has expanded overseas in 15 countries on three continents.

Reasons for more Brazilian companies to move abroad include:

• The companies are following clients into international markets
• These companies are defending their competitive position, monitoring the competition in international markets, meeting international demand and reducing their dependence on a single (domestic) market
• Companies are looking for more natural resources, lower costs, better infrastructure and better incentives than they can find at home
• OFDI stimulates exports
• It improves the competitiveness of companies in Brazil

• iShares MSCI Brazil Index (EWZ): up 76.3% year-to-date; Petrobras is 11.6%

For more stories about Brazil, visit our Brazil category.

An economic gap is forming as the United States inches toward a tepid recovery, remarks Martin D. Weiss for Money and Markets. The magnitude of the gap that is forming between our country and emerging markets such as China and Brazil can be seen in the unemployment numbers.

While the United States reported higher hourly earnings, increased work hours and a small decline in unemployment rates, the long-term employment rate does not look so pleasant.

• Only 59.4% of Americans are actually working
• Including  part-timers looking for full-time status, plus those who gave up looking, joblessness stands at 16.3%; that’s a large difference from the government’s official 9.4% rate
• If you count the people who have stopped looking, the actual estimate is closer to 20.6%

In contrast:

• Brazil’s unemployment rate diminished to 8.1% in June. For the first time in history, their unemployment is lower than Europe’s. Brazil has increased hiring by more than 299,000 jobs in the first half of the year.
• China expects Beijing’s urban jobless rate to reach 4.4% this year. China is starting up factories, which has increased industrial production to 10.7% in June year-over-year. Urban fixed-asset investment has jumped 30.5% to $758 billion in the first four months of the year. The goal of an 8% GDP expansion is likely to be met and the country may even surpass Japan as the second-largest economy in the world by the end of the year.

These are just two ETFs benefiting, but there are several others that target China and Brazil, through both single-country exposure as well as broad BRIC funds (Brazil, Russia, India and China). Take a look at our special BRIC report for more information on BRIC countries and how you can invest in them:

• iShares FTSE/Xinhua China 25 Index (FXI): up 44.8% year-to-date

• iShares MSCI Brazil Index (EWZ): up 72.2% year-to-date

For more information on emerging markets, visit our emerging markets category.

Max Chen contributed to this article.

The government is expecting between 6.25% and 7.75% growth this year. That’s in line with the Reserve Bank of India, which upgrading its overall view. One concern is a growing fiscal deficit, which will make it challenging for the government to do much more to jump-start the economy.

A slump in agriculture and a weak monsoon season may create more inflationary pressure, especially for food, reports Elffie Chew for The Wall Street Journal. A drop-off in the agriculture sector would put even more pressure on the government to step in with a fiscal stimulus measures.

The Central Bank of India left rates unchanged this week, as expected. Ashok Sharma for BusinessWeek reports that the bank kept the repo rate for short-term loans to commercial banks unchanged at 4.75 % and the reverse repo rate — the rate it pays to banks when absorbing funds from the financial system — unchanged at 3.25%.

Business confidence in India is up, as signs of life are stirring in the Indian economy.

• WisdomTree India Earnings (EPI): up 63.7% year-to-date

For more stories about India, visit our India category.

It is anticipated that the South Asian nation will grow between 6.25% and 7.75% in the current fiscal year.  The speed at which India’s GDP will grow is heavily dependent on the overall health of the global economy and especially the United States, states Neelabh Chaturvedi and Abhrajit Gangopadhyay of The Wall Street Journal.

• India’s recovery is likely to be aided by favorable external factors such as a pickup in trade and resumption of capital flow into the stock market.
• A revival in exports and the  effects of previous fiscal and monetary policies will also help the nation’s economy to expand.
• The most recent decline in commodities prices, most notably crude oil, will shrink oil import bills reducing the nation’s trade gap.
• The cut in factory levies and increase of employee salaries by the federal government will aid in the health of India’s economy.

On the negative side, mother nature may hinder the nation’s recovery. Monsoon rains are threatening the annual output of staple crops such as sugar cane, wheat and oil seeds, states Gangopadhyay.  Watch the trend lines for any signals of a turnaround.

• WisdomTree India Earnings Fund (EPI): up 60.4% year-to-date

• PowerShares India Portfolio (PIN): up 52.4% year-to-date

For more stories on India, visit our India category. For more information on investing in the BRIC countries, view our special report.

Kevin Grewal contributed to this article.