The emerging market stars of the future

Not all the emerging markets that did well last decade will continue to do so, says author Ruchir Sharma. So where can you still find growth?

By the middle of the last decade, says Ruchir Sharma, head of emerging-market equities at Morgan Stanley, "it seemed that every man and his dog could raise money for emerging markets. By the end, it appeared that just the dog would do." But investors should be wary of the popular idea that the emerging world as a whole will continue to advance rapidly, with the charge led by the relentlessly expanding BRIC states of Brazil, Russia, India and China.

This popular notion is due to the unprecedented emerging-market growth spurt of the 2000s, which encompassed almost every developing nation. But that was a historical anomaly, says Sharma. It was due largely to "a worldwide flood of easy money". As that has receded and the indebted developed world cuts back on foreign imports, emerging markets face a "new normal". As in previous decades, some countries will do better than others.

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