BUDAPEST, Hungary, February 17, 2016 /PRNewswire/ --
This year started with a serious market correction which brought light to many weaknesses of the global market. Innovative Securities, in its market analysis, has noticed emerging trends to indicate the optimism is over and now pessimistic analyses are rife, even where developed countries are concerned. Formerly, this pessimism about developing countries followed only after the sharp fall of commodities and growing corporate debt due to the strong USD. Because of this, many investors are afraid of developing countries, but there are signs that show it might a good idea to go against the beliefs of the majority, Innovative Securities believe.
"This year, after seeing the problems with global stock exchange, the FED will probably wait with rate hikes. Instead of the 3-4 rate hikes expected last December, there might be no rise at all," said Innovative Securities. "This may stop the strengthening of the USD and maybe even start the fall of the greenback. This can reveal some pressure from the developing countries and commodities."
Of course, there are differences between the developing countries and not all of them can be the winner of this situation. Countries where low energy prices can help domestic consumption and the growth of the GDP and countries where governments are open to start economic reforms could be the real winners.
India for example, may have the fastest growing economy this year with a 7.8% growth according to the World Bank's new prognosis. The Indian government continually eases the flow of foreign currency into the country; they have no real export exposure to developing countries like China and Brazil and even their slowdown is not a serious problem for them. All this may have positive effects on the Indian Nifty 50 index. Innovative Securities believe the index has a potential 20-30% growth in the next 1-1.5 year.
Brazil might also expect great years, even if the country has been vulnerable lately. Investments of the Olympics, the slowly starting reforms and the export, stimulated by the weak currency, may all lead to the acceleration of the economy. Probable turnaround in oil prices would urge Brazil's economy even more.
These developing countries still have their risks, but there are signs that can lead to growth. It might be a great idea to consider investing in here, with proper diversification of course.
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SOURCE Innovative Securities Limited