The low cost of lending at the present time, with an increase in money supply, has raised the appetite of many investors for risk in order to search for opportunities to achieve high returns on their investments. But, in an interconnected world, what is the best investment that can bring you a high return, more than you expected? You should always bear in mind that profits and high-returns are never guaranteed. Investing is inherently risky, so you may get back less than you invest.
In any case, one of the places an investor should look at in their research journey that have the potential to provide returns are emerging markets.
So what are emerging markets? And what is the reason behind the potential for high returns?
While there is no fixed definition of emerging markets, emerging economic markets are defined as markets for developing countries in the process of growth to increase their participation to become more involved in global markets. Countries whose markets are classified as emerging markets, have some but not all of the characteristics of advanced or developed markets, such as the high volumes of foreign direct investment, as well as the development of financial systems and government legislation.
The world's 5 largest emerging economies (in order from largest to smallest):
- China
- Russia
- India
- Brazil
- Turkey
So that you can imagine potential, but not guaranteed, opportunities available in emerging markets around the world, here we will compare the market capitalization of emerging financial markets around the world with the market value of some of the largest US technology companies:
One factor that may facilitate the creation investment opportunities in the technology sector in emerging markets in Southeast Asia is digital transformation, with some analysts believing that Southeast Asian countries are the next digital giant. Since 2015, the region has added more than 140 million internet users, which is a very high number in record time. 70% of the total population of 583 million people in the region have access to the Internet.
Southeast Asians also spend the longest number of hours per day surfing the Internet. Internet users in the Philippines spend an average of 10:02 hours per day browsing the Internet, which is 56% longer than the global average of 6:42 hours a day spent surfing the Internet.
Why should investors aiming for high returns care about all these numbers?
In the last 5 years, the volume of e-commerce has tripled, from $32 billion in 2015 to $105 billion in 2020. According to some statistics, the size of the Internet economy in Southeast Asia is expected to reach $309 billion by 2025, meaning that it will nearly triple its current size and nearly 9 times what it was in 2015.
Countries located in Southeast Asia also have many factors that could help them become one of the largest digital economies around the world. If the region continues to develop its digital economy at the same pace, it may become an incubator for the next major technology companies, such as TikTok app and the dominance of this application in the world of social media and content industry, and it is owned by a Chinese company. Some of the factors that will help Southeast Asian countries to have a huge digital economy:
- Young demographics: The average age of the region's population is 30.2 years.
- High income: More than 50 million people in the region are expected to join the middle class.
- Technology Adoption: The region has added more than 100 million internet users, which in turn is helping to grow the volume of e-commerce in the region.
*Investing in emerging markets is more risky than developed markets.
Source:
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Past performance is no guarantee of future results. Your investment can fluctuate, so you may get back less than you invested. Consider each product’s risk(s) before investing.
Baraka is not a financial adviser and therefore does not provide financial/investment advice. Our content is informational only.
