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ENC: Move Over, BRICS – Time to Play the TIMPs!

Nossos concorrentes e como o Mercado nos vê

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Uncommon Wisdom
Friday, June 21, 2013
Move Over, BRICS — Time to Play the TIMPs!
by Rudy Martin
Dear Jonas,

Rudy Martin

Tell the developing BRICS nations (Brazil, Russia, India, China and South Africa) that it’s time to move over. That’s because the TIMP team is taking over the field!

Four newly industrialized nations are quickly becoming world-class powerhouse economies: Turkey, Indonesia, Mexico and the Philippines. And I believe you’ll want to be on board when it’s time for these exploding economies to really take off!

For decades, investors have focused on the big five developing BRICS nations. And as we’ve discussed many times in this space, these have offered us a terrific way to capture the magic of growth in new lands that were less-popular among mainstream investors.

And while they continue to offer opportunity, some are also experiencing growing pains on the way up. Meanwhile, the the feisty up-and-coming TIMP challengers offer us yet another way to stay a few steps ahead of Wall Street.

Of course, these countries still have to earn their stripes in the broader global economy. But these nations are quickly moving into position as the next wave of economic global growth leaders in the coming year.

And the good news is, there are already plenty of ways already available to profit from them … right here on the U.S. exchanges!

Did you catch this video, Jonas?

Tony Sagami’s new investor presentation is now online. Have you seen it yet?

This groundbreaking investor series reveals the simple investment system Tony discovered that could have handed you $6,380 in gains for every $1,000 invested …

That’s more than six times the profits of the S&P!

If you missed any part of this eye-opening briefing, or want to watch it again, click this link now!

Internal Sponsorship

Mexico

President Obama visited Mexico last month to meet with its new president, Enrique Peña Nieto. According to the Washington Examiner, there was some speculation that the true motives behind the visit revolved around Obama’s push for immigration reform.

I think the media got that one wrong. It’s not about keeping the borders safe anymore. These days, the United States is looking to attract more of Mexico’s business.

Mexico’s economy weathered the 2008 global crisis better than many, and it’s growing at nearly double the rate of the United States’.

Mexico has become a manufacturing hotspot. Its economy has grown at about twice the pace of ours since the end of 2009, lessening the allure of the U.S. for Mexican workers.

In fact, net Mexican migration dropped to zero from 2005 to 2010, according to the Pew Hispanic Center, a nonpartisan research organization.

When Obama was in Mexico City, he and local leaders discussed U.S. economic interests … specifically, working to strengthen commercial ties and address issues that are currently impeding economic growth.

The two countries sell one another some $500 billion worth of products and services every year. Since taking office five months ago, Peña has pushed an array of economy-related reforms, many of which benefit to U.S. interests. This is all good news and getting better.

We’ve covered the “M” portion of TIMP first because it currently offers the most-diverse universe of investing opportunities. Like most world markets, it has recently pulled back, but to me that’s opening up a great buying opportunity if you’re thinking of dipping a toe into TIMP territory.

Now let’s take a look at how to gain some solid exposure in the other fast-developing global economies …

Turkey

Turkey has been dubbed the “Hottoman Empire” for its recent stretches of torrid economic growth, favorable working-age demographics, and strong tourism and automotive industries … all great reasons for investors to take a stake before the next growth wave.

The outlook for Turkey’s economy continues to improve as the bank cut its key rate by 50 basis points to 5%, saying weak global demand and commodity prices should contain the upward pressures on inflation.

Turkey recently bid to join the European Union, a move that Germany is blocking as the Turkish lira hovers near an all-time low and as unrest — thanks to ongoing anti-government protests that started earlier this month — weighs heavily on its markets.

While the Turkish markets continue trying to claw back some of their heavy losses, the recent bout of violence and political uncertainty have dulled the appeal of investing in Turkey.

However, the selling only serves to underscore the fact that many Western investors just don’t get this country’s potential. I believe the selling may be an over-reaction to Turkish politics. After all, pictures of rioting protesters tend to scare away more-conservative investors, and that in turn slows the money going there.

I think the fundamental story continues to be a positive one. When the demonstrations end, EU officials will likely be more-open to discuss admission to the euro-zone and, I suspect, investors will start returning to the table as well.

Indonesia

In Indonesia, private consumption by a rapidly rising middle class accounts for nearly half of the nation’s GDP growth.

With a population of 242 million, Indonesia’s economy is likely to grow 6.7% this year. That’s up from a 6.2% pace last year, making it the fastest-growing economy in Asia behind China.

And last but not least …

The Philippines

I saved the best for the last with the Philippines, which is benefitting from a growth in customer-service call centers and money transfers from citizens working abroad. Plus, the country just got its much-anticipated credit upgrade.

The Philippines beat Indonesia to win an investment grade from Standard & Poor’s, as President Benigno Aquino has increased state spending while narrowing the budget deficit.

With moderating inflation and the government’s declining reliance on foreign currency debt, the Philippines is an enviable position … and so are its stocks.

Some Parting Thoughts on the BRICS

With the recent slippage in Brazil’s economy and growing political unrest there, as demonstrators protest the vast sums of money being spent on the World Cup and other sporting events, I’d put Brazil as a trading or investing idea on hold for a while.

But other than that, I’m not souring on the BRICS. The TIMPs aren’t yet the talk of the town in Wall Street circles, but I expect that to change in the coming months and years.

There are plenty of ways to gain exposure to the next generation of global powers. Mexico currently has the most to offer in the way of stocks, but you can take a look at any of these countries’ ETFs now.

You can also keep watch as these up-and-coming global powers start to offer more stocks for Western investors to choose from. I know I will be!

Best wishes,
Rudy

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