Friday, November 16, 2007

International Markets-The Case for China and Brazil

Yesterday I discussed the situation in Japan, and how their situation has helped other markets. Now lets take a look at a couple of others. China's markets have seen a healthy, gradual pullback in the past week or two. Everyone expected to see it collapse on itself, and so far, it is acting rationally. The Chinese government is doing its best to cool growth, and it seems to be doing well so far. This bodes well for the bullish case to stay in place as it will keep investors confident that the market won't collapse. From a valuation standpoint, I found something very interesting. The BRIC markets (Brazil, Russia, India, China) are valued at 25% of their GDP, while industrialized nations are trading at 81% of their GDP. This article displays the stats.

I also am bullish on Brazil. They are a quickly growing, resource rich nation. Their market has experienced growth through its banks and commodities. The have taken a little bit of a back seat to China's amazing growth story, and this is a good reason to take a look at it. They don't have the resource of population like China, but they are still a good place to invest. China still is so heavily government controlled and a strange move could pull the rug out from their markets. I don't see the potential for that type of situation in Brazil.

My favorite ways to invest here are in the ETF's. BRIC ETF (EEB). Brazil ETF (EWZ).

I found the article through The Kirk Report's website which is a great resource. www.kirkreport.com

Disclosure: Author owns EEB.

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