In today’s changing global economy, it’s eat or be eaten. The stalwart mega-cap corporations and emerging market exchange traded funds (ETFs) should pay attention: developing market companies are moving steadily up the food chain.
There’s a growing throng of hungry, cash-rich and dynamic companies bursting out of the emerging markets and onto the world stage, says Amy E. Buttell for NASDAQ. The more emerging markets develop, the more of a threat the companies based there are becoming a threat. [Harvard Endowment’s ETF Holdings.]
This means a major shift in world trade. Some analysts predict that developing countries will account for two-thirds of world trade soon; they account for one-third right now. [Financial ETFs: Why Emerging Markets Are On Top.]
Emerging market corporations aren’t the only powerful entities; their consumers are powerhouses, too. Case in point: JapanToday reports that Toshiba President Norio Sasaki says that the electronics giant’s operating profit is expected to rise, with emerging markets the prime consumer. As part of its medium-term business plan, Toshiba will also aim to raise its overseas sales ratio to 63% in fiscal 2012 from 55% in fiscal 2009. A 31% increase is expected to grow for the company with overseas markets in mind.
This means that ETF investors who are ignoring global markets would be unwise to continue to do so. As the United States’ global market cap shrinks and developing market corporations become more competitive, ETFs are one easy way to benefit. Watch those trend lines to see who’s leading the charge. [How to Follow Trends.]
For more stories about emerging markets, visit our emerging markets category.
- Emerging Global Shares Emerging Markets Large Cap (NYSEArca: EEG)
- iShares MSCI Emerging Markets (NYSEArca: EEM)
- Vanguard Emerging Markets (NYSEArca: VWO)
Tisha Guerrero contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.