Tuesday, February 14, 2017

Five Country Classifications

Mature Countries:
These are established countries with stable economies and older infrastructure. Countries include United States, Canada,Western Europe, and Japan. Risk factors include aging population, limited economic growth, extremely high national debt, and high pension obligations. It is important to choose countries which will continue to be competitive and relevant in today’s economy.

Japan, Austria, Benelux (Belgium, the Netherlands, and Luxembourg), France ---these governments are virtually antibusiness

PIIIGS: Portugal, Ireland, Italy, Iceland, Greece, Spain

Advanced Growth Countries:
These countries are considered financially and economically strong and had a history of robust economic growth in the past, but as a group growth is beginning to slow down. Such countries include Hong Kong, Singapore, South Korea, Taiwan, Australia, New Zealand, Chile, and Israel.

Growth Countries:
This group of countries notably include BRICs (Brazil, Russia, India, China), make an attractive growth investment because they are growing at a higher growth rate than mature economies, and many GDP per capita growth rates are projected to be double that of developed countries. Countries include BRICs, Mexico, Indonesia, Thailand, Malaysia, Hungary, South Africa, Czech Republic, Philippines, and Poland. Although Turkey is a member of this group, due to political turmoil exercise caution before investing in Turkey at this time.

Emerging Growth:
Emerging growth countries have been predicted in the past to show large growth but in one way or another have not seen the success that growth countries had. Some countries in this group are expected to emerge into the growth category in the next few decades according to analyst and presents an attractive price to the right investor. Countries include Pakistan, Columbia, Peru, Philippines, Indonesia, Nigeria, United Arab Emirates (UAE), Morocco.

Finally, frontier countries. This group represents the rest of the countries in the world that have never really emerged. Although some countries may never exhibit signs of growth and prosperity as other countries (in our lifetimes), there are other countries that may develop exponentially. This presents a lot of opportunity, particularly for investors under 50. Countries include Bangladesh, Vietnam, Croatia, Slovakia, Mauritius, Egypt, Argentina, Sri Lanka, and Qatar.

MSCI world index (see gmail for more details)

  • problem: in this index, investors are underweighted in the countries that are clearly growing faster
  • those higher growth markets will over time have stock markets that will give a higher return

FTSE global index

Corruption Perception Index (CPI) by Transparency International
Bribe Payers Index
Global Corruption Barometer

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