The place smelled of damp cardboard. Then again, this was monsoon season and every day that I’d been in town had seen torrential downpours roll through.
I was standing on Pansodan Street in the heart of Rangoon, Burma. During the heyday of military rule, this was a hotbed of quiet sedition, lined with a string of bookshops in which hushed voices plotted the overthrow of a maniacal, totalitarian government.
Today, it’s overrun by one consumer-electronics store after another — including the one I had stepped into to meet a portly store owner about Burma’s dramatic rise in consumerism since the military government stepped aside and began reforming the economy.
But this isn’t a story specifically about Burma. It’s about retailing, and how, when given even the slightest hint of hope, retail finds a way to thrive … which means that those investing in emerging markets routinely book monumental gains.
Think of it as a portal back in time to one of the greatest investment trends in history: the rise of the American consumer class.
Every year, a research outfit known as A.T. Kearney publishes the Global Retail Development Index, which ranks the world’s developing economies in terms of the attractiveness of their retail landscape. It’s designed for retailers that are looking to understand where opportunities exist globally and why — but it’s also a great tool for investors, because it serves as a roadmap to the hottest retail markets in the world today.
Economies ultimately grow because of people. A place like China initially lifted itself up because of the manufacturing economy it built, but manufacturing can only go so far in propelling a country. At some point, economies need local consumers to demand local stuff. When that trend begins to move in — when countries begin showing up in the A.T. Kearney report — it means investing in emerging markets and their local retail is where we, as investors, will find some of the greatest opportunities.
Emerging Markets Want It All
I’ve traveled to every habitable continent on the planet, hitting 53 countries along the way. I’ve trekked through shopping malls and retail outlets in Western economies, highly developed emerging markets, lowly developed emerging markets, and even places like Burma that barely cling to “frontier market” status.
No matter where I alight, one fact is universal: Everyone wants to live like we do in America.
They want TVs and refrigerators. They want laptops and cellphones. They want fast food and hygienic supermarkets and cars and cartons of milk and budget airlines and washing machines and boxes of cookies and chocolates. They want everything. And increasingly they have the money to buy what they want.
Which is exactly why the global ranking is so instructive for investors.
Put your money to work in these emerging markets and be patient. Over time you’re going to accumulate vast profits as local consumers do exactly what we did in America starting in the late 1940s: BUY BUY BUY!
Growing Consumer Sector
Topping this year’s list: China, which returns to the top spot for the first time since 2010. That’s not terribly shocking. China is massive, its consumers have increasing sums of money to spend, and they’re competing aggressively against us in the West for everything from fine wine to rare collectibles and even milk powder. My Profit Seeker readers are all over the Chinese consumer because those consumers represent such a monumental investment trend.
More interesting, however, are other countries on the list.
Mongolia didn’t even crack the top 30 last year and it’s now fifth. Qatar has never been ranked, yet the wealthy Arab enclave landed the No. 4 spot this year. Colombia, one of my favored destinations for investing, has climbed into the top 20.
To be sure, aside from China many of these countries are a challenge for the average investor to put money to work. But that doesn’t mean you should write them off and move on. There are ways to benefit.
Several months ago, I helped my friends at EverBank design a certificate of deposit that plays to the emerging markets that are growing the fastest — because where you find fast-growth economies, you find a fast-growth consumer sector.
It’s called the MarketSafe Future EconomiesSM, comprised of the currencies of what I call the New G7 economies: Brazil, Russia, India, China, Turkey, Mexico and Indonesia — the next seven largest economies behind the existing G7. (Russia is not in the CD because of technical issues tied to sanctions the U.S. and Europe have placed on the country.)
The thing is, the New G7 today actually generate a level of economic output that surpasses the traditional G7. That means we are now living in a New G7 world, and from here on out the New G7 will continue to grow larger, and at a faster pace, than the old world order.
Every one of the New G7 economies ranks in the top 30 of the A.T. Kearney report. They are among the most opportunistic retailing opportunities in the world today — which means they are among the most opportunistic investment opportunities today.
As their consumers continue to drive local economies, the local currency will naturally strengthen.
And the best part of this as it relates to the Future EconomiesSM CD is that you have no risk of loss. Because EverBank made this a MarketSafe CD, you can never lose a penny, even if the currencies all decline in value. No matter what, you will always get back at least what you invested, as long as you don’t withdraw your money before expiration. And if after five years the CD is up even marginally, you’re guaranteed a minimum 10% return … and if it’s up more than 10%, you get the full return.
It’s a no-lose way to benefit from all those consumers from emerging markets who are out spending scads of ruble, yuan, rupiah and pesos on all the same kinds of things you and I are buying every day.
Until next time, stay Sovereign…
Jeff D. Opdyke
Editor, Profit Seeker