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BRIC Goes Bust?
Brazil, Russia, India, China – what a difference bear market makes.
A couple of years ago, the economic tilt the world had held for the past 50 years seemed to be changing: Quietly, the balance of commercial power was shifting.
BRIC (or BRICS) was the reason – an acronym for Brazil, Russia, India, China and (usually) South Africa – an alliance that, according to Frontpagemagazine.com, was supposedly formed in 2002 “to muscle the U.S. out of global markets where possible."
The combined average annual economic growth of the BRIC nations more than doubled that of a G-7 nation, and their remarkable stock market performances attracted huge numbers of foreign investors into emerging markets. The "muscle out" strategy appeared to get results. At the time, The India Daily likened the emergence of the BRICS to the declaration of a new cold war:
"While America is busy in Iraq, Vladimir Putin is positioned to take control of the world as another superpower. He has created this proud coalition of four – Brazil, Russia, India and China – with large population bases, large natural resources and unending technical talents as well as large consumer bases…that will eventually become the strongest trade and military bloc in the world. The cold war will not be similar to one between America and old Soviet Union. The covert war will be in the area of trade, commerce and finance."
Well, here we are, three years later. And here is a fresh stock market snapshot of the "R" in BRIC – Russia. (Some labels erased; see full chart now in the January European Financial Forecast.)
After such devastation, BRIC is not what it used to be. In fact, Standard & Poor's recently doubted "whether the BRIC countries ever shared much in common other than scale and high portfolio inflows." (Reuters)
That's quite a statement. What a difference bear market makes.
According to the same S&P report, China is the BRIC nation most likely to stay "well ahead of other large developing nations as they tackle a global financial crisis." Interestingly, we here at Elliott Wave International agree – except, we said it years ago. In his October 2003 Elliott Wave Theorist, EWI's founder and president Bob Prechter stated:
"China will have a severe economic setback along with the rest of the world, but it will be a 'wave 2,' from which the country will emerge as the economic leader of the world."
How will other BRIC nations fair in this crisis? We bring you continuous analysis of the short and long-term trends in the stocks of Russia, India, China and beyond in our tri-weekly and monthly publications. Read the latest forecasts online now, risk-free: