The Best Way to Invest in BRICs, Part 2

Although the markets of the BRIC countries  (Brazil, Russia, India, and China) have crashed along with those of the rest of the world, these countries have tremendous growth potential – which could mean investment opportunities for you.

Their growth potential is due to several factors, including abundant natural resources, low labor and production costs, and increasing foreign trade.

I gave you an overview of Brazil and Russia yesterday. Today, let’s look at India and China.

India has great long-term potential due to its stable economy and position as a low-cost producer of manufactured goods. And consumer demand is exploding as India’s standard of living increases. Because so many people in India speak English, many companies from English-speaking countries have sales and service operations in India. And India’s highly skilled and educated workforce has led to a strong software development industry.

The best way to play India: PowerShares India (PIN). This exchange-traded fund holds a nice basket of Indian stocks and seeks to mirror the Indian stock market as measured by the Indus India index.

Although China still has a communist dictatorship, the country is open to free trade and capitalism. China is the main outsourcing location for manufacturing today. Labor is still very cheap, and logistics between China and the U.S. are very good. It will remain the top low-cost producer of manufactured goods for years to come. Furthermore, with the Chinese enjoying a higher disposable income, domestic consumption is exploding. As a result, retail sales are hitting record highs.

The best way to play China: iShares FTSE/Xinhua China 25 Index (FXI). This exchange-traded fund holds a nice basket of Chinese stocks and seeks to mirror the Chinese stock market as measured by the FTSE/Xinhua China 25 index.

Comment on this article