BRIC economy and the Global stock markets

BRIC - The BRIC Countries of Brazil, Russia, India and China

In economics, BRIC (typically rendered as "the BRICs" or "the BRIC countries") is an acronym that refers to the fast-growing developing economies of Brazil, Russia, India, and China. The acronym was first coined and prominently used by Goldman Sachs in 2001.[1][2] According to a paper published in 2005, Mexico and South Korea are the only other countries comparable to the BRICs, but their economies were excluded initially because they were considered already more developed

The BRIC are both the fastest growing and largest emerging markets economies. They account for almost three billion people, or just under half of the total population of the world. In recent times, the BRIC have also contributed to the majority of world GDP growth.

Goldman Sachs argues that the economic potential of Brazil, Russia, India, and China is such that they could become among the four most dominant economies by the year 2050. The thesis was proposed by Jim O'Neill, global economist at Goldman Sachs

According to various economists projections, it is only a matter of time before China becomes the biggest economy in the world - sometime between 2030 and 2050 seems the consensus. In fact, Goldman Sachs believe that by 2050 these will be the most important economies, relegating the US to fifth place.

By 2020, all of the BRIC should be in the top 10 largest economies of the world. The undisputed heavyweight, though, will be China, also the largest the creditor in the world.Apart from their growth characteristics, the BRIC countries frankly have little in common. They are primarily an investment category now, although there may some political and economic alliances that develop from that grouping. If they do, it is likely to be temporary - once China has assumed its rightful place, it may have no need for these alliances. A G2 of China and the US may be more important for it unless the 2050 predictions do come true.

The future is definitely in the BRIC nations and an investor who wants to supercharge his portfolio most figure out a way to participate and also be to navigate the wild swings that come from emerging markets which can double one year and fall in half the next.



US based investors have access to several BRIC focused exchange traded funds, such as the BIK S&P BRIC 40, which tracks a basket of blue chip stocks in Brazil, Russia, India, and China. There is also the Claymore/BNY BRIC, which holds 75 companies that trade in the US as American depository receipts.

There are several hundred BRIC companies that trade in the US stock exchanges as ADR's, that US investors can buy. They also can buy directly into BRIC countries through some brokerages, such as Etrade, which now allow their customers to invest in overseas stock exchanges, but for now ADR's are the simplest route to go, because more information on companies with dual listing is available, with full SEC filings.

The results are startling. If things go right, in less than 40 years, the BRICs economies together could be larger than the G6 in US dollar terms. By 2025 they could account for over half the size of the G6. Of the current G6, only the US and Japan may be among the six largest economies in US dollar terms in 2050.

In 2001 and 2002, real GDP growth in large emerging market economies will exceed that of the G7. At end-2000, GDP in US$ on a PPP basis in Brazil, Russia, India and China (BRIC) was about 23.3% of world GDP. On a current GDP basis, BRIC share of world GDP is 8%. Using current GDP, China’s GDP is bigger than that of Italy.
Over the next 10 years, the weight of the BRICs and especially China in world GDP will grow, raising important issues about the global economic impact of fiscal and monetary policy in the BRICs.

In line with these prospects, world policymaking forums should be re-organised and in particular, the G7 should be adjusted to incorporate BRIC representatives.

The list of the world's ten largest economies may look quite different in 2050. The largest economies in the world (by GDP) may no longer be the richest (by income per capita), making strategic choices for firms more complex.