Emerging Markets
Viewed through macroeconomic lenses, this is an asset class that US investors are expected to continue to increase allocations over a lifetime. Countries that have large populations that are growing a middle class, or cheap labor for manufacturing, or natural resources in demand, teamed with a supporting government, should be able to outperform major economies. In simple investment terms, the peaking US dollar will look outside the US for better growth and diversification.
Here are the countries I am reading about because their story is investments interesting :
Argentina - The story here is the big government change since the 2023 election. Since 1946, Juan Perron’s government support of the working class escalated over the years to many inflated government entities, expanding deficit spending that achieved a high debt level, inflation over 100%, and 5 bond defaults. For example, US Plastic surgeons went to Argentina to get experience because plastic surgery was subsidized and cheaper than anywhere in the world. The election of Javier Milei in 2023 (and his powerful team of economic advisors) brought a quicker-than-expected turnaround. Reducing government, excess spending, policy deregulation, and increasing foreign investment incentives have unlocked a country full of natural resources to attract investment again. The government’s work seems sustainable and Argentina is on a path to being included in the MSCI Emerging Market index. Milei’s government will likely get reelected in 2025 to stabilize growing foreign investments.
Vietnam - The story is a country that is pro-business, politically neutral, and has plenty of low-cost skilled labor. A shrinking government bureaucracy that uses saved spending funds by reinvesting in public investments. Foreign investments are growing.
Greece - the turnaround from spending over 200% of its GDP and staying in the EU is still in progress with success. EU Stability loans and reduced government spending are attracting investors.
Colombia - Changing government, oil resources, and Venezuela all add to an improving investment landscape. This may be early, but if elections go as expected, then 2026 can be a big year. Colombia could become a similar turnaround story to Argentina with current cheap valuations.
The BRIC countries that EM investing has been talking about for some time. Brazil is struggling but has natural resources, and cheap labor to make them economically relative. Russia will explode economically if the post-Putin government. India - best chance to be the best investment. Large and very educated young middle class that is tech-heavy. They are the China supply chain alternative. China we hear about daily but we went from few having China exposure 20 years ago to now everyone has a little. India, Brazil, and Russia
