But the difficulty that foreign banks face when trying to enter emerging markets is mutual. Emerging market banks face the challenge of entering an increasingly regulated banking environment in developed nations.
Although developing market banks have risen with the emerging market tide, they will need to need to find innovative ways to access foreign markets in order to profitably grow their business into large-scale operations that make money. [6 ETFs to Mind in a European Banking Crisis.]
One idea is to export competitive advantages. For example, in India, that would be low-cost technology. In Brazil, that would be investment banking.
If developing market banks are successful, related ETFs should also do well; many single-country emerging market ETFs have their heaviest weightings in the financial sector, including Market Vectors Indonesia (NYSEArca: IDX), Market Vectors Africa (NYSEArca: AFK), iShares MSCI Poland (NYSEArca: EPOL) and iShares MSCI Thailand (NYSEArca: THD). Look around – there are many more beyond these.
For more stories on emerging markets, visit our emerging markets category.
- For broad exposure to emerging market financials, take a look at iShares MSCI Emerging Markets Financials (NASDAQ: EMFN). EMFN launched in January, so it’s still relatively new. It has holdings in China, Brazil, South Africa, India, South Korea, Thailand and several others.
Sumin Kim contributed to this article.