When former Goldman Sachs (NYSE:GS) economist Jim O'Neil first dubbed the four nations of Brazil, Russia, India and China the BRICs back in 2001, he made one of the gutsiest long-term global macro-economic calls - that these nations would be the biggest drivers for future global growth. O'Neil's prediction has, for the most part, come true. The BRIC’s have blossomed and are now some of the most important emerging markets on the planet.
However, with nations like China and Russia hitting their strides, their growth has begun to slow. That’s prompted many analysts and pundits to search for the next big group of emerging leaders. Well, investors may not have to look much further past the originator of the BRIC.
O’Neil’s newest block of nations- dubbed the MINTs- share many characteristics with the former BRIC leaders. And if history is any indication of what’s to come, the MINTs could be some of the best portfolio plays for the next decade.
Huge Growth Ahead
The last decade has been great for the BRICS. GDP and stock prices for the group have surged, while BRIC-focused funds have -like the SPDR S&P BRIC 40 (NYSE:BIK) - swelled in assets. However, the last few years haven’t been filled with much of the same euphoria for the BRICs. In fact, the nations of Brazil, India, China, and Russia have actually been some of the worst performers out there. To that end, many investors have begun to look for the next group of emerging markets that will take a leadership position.
Look no further than the MINTs or Mexico, Indonesia, Nigeria and Turkey. And like the BRICs, the MINTs feature many of the same positives that the original bloc had.
First is a growing and young population. The new four emerging market horsemen have a combine total population size of nearly 623 million people- the bulk of which are under 25 years old. That young and sizable workforce will help the MINTs prevail as an aging population in Europe, Japan and United States begins to hinder economic output in these nations. Even more so as the MINTs are set-up as vast exporters of raw and finished goods.
Aside from that young workforce, the MINTs are being driven by their rich commodity wealth. The trio of Nigeria, Mexico and Indonesia all remain huge oil producers and exporters. Indonesia has also benefited from its rich coal wealth. The key for this commodity wealth has been these nation’s strategic locations. Indonesia has benefited from its proximity to China in shipping its vast coal exports, while Nigerian oil has been bound for Europe.
These two facts- plus the MINTs relatively good public finances and the easing doing business in these nations- and you’re beginning to see a similar growth profile like BRICS early on.
Making A Play
While there is no broad-based MINTs ETF- like the Guggenheim BRIC (NYSE:EEB) –investors can construct their own MINTs portfolio using single country ETFs and individual stocks.
With data from Renaissance Capital already showing that Nigeria has surpassed South Africa as the biggest economy in Africa- by about $50 billion dollars- the Global X Nigeria Index ETF (NYSE:NGE) could be a great bet. NGE tracks 32 different holdings- with financials and consumer names making up the bulk of the portfolio. That should help investors win as Nigeria’s huge population begins its consumer journey. The only drawbacks is that NGE is quite illiquid as a fund and expensive to own. Costs at NGE run 0.92%.
Two of the biggest values could be had in Turkey and Indonesia. Both were the markets darlings after the credit crisis took hold. However, since then, bouts of inflation and lack-luster short term growth have hurt equities in their markets. Turkey alone is grappling with 8% inflation. However, as the gateway to emerging Europe, the iShares MSCI Turkey (NYSE:TUR) could be a great long term buy. So far the ETF is down about $30 from its 52-week high. The same can be said for the Market Vectors Indonesia Index ETF (NYSE:IDX), which has also plunged over the last year.
Finally, as one of Latin America’s better buys, Mexico is exporting powerhouse. Aside from the iShares MSCI Mexico (NYSE:EWW) many Mexican equities do trade on the U.S. exchanges. Stocks like tortilla maker Gruma (NYSE:GMK) or global cement producer CEMEX (NYSE:CX) can be tapped quite easily to gain exposure to the nation.
The Bottom Line
It seems that the mighty BRICs have finally begun to slow down on their economic journeys. That’s prompted many investors to look for the next big thing. Their search could lead them to the MINTs. The group of Mexico, Indonesia, Nigeria and Turkey could be brightest stars in the emerging world.
Disclosure - At the time of writing, the author did not own shares of any company mentioned in this article.