Globalization and world markets, as well as companies which help donors/lenders choose partners in developing countries, are leading many individuals to seek opportunities to try doing business in developing countries. While small-return micro-loans may be a good option for less savvy investors, the stock markets of developing countries offer the potential to give healthy returns on investments while giving all the advantages of -getting in on the ground floor.-

While established stock markets like the Dow Jones, NASDAQ, FTSE, and the various Asian markets may be tempting for those looking to diversify their holdings on the world markets, other, less-known options can offer superior benefits to investors who want to try doing business in developing countries.

While the Asian markets appear tempting at first glance, given China’s current domination in the area and the amount of capital being invested, stock markets in countries such as South Korea can be difficult for foreign investors to gain entry to - there is no easy procedure for foreigners wishing to invest in this country’s stock market (although it is possible to buy into South Korea’s ADRs if you’re unable to do so directly), and in addition, to try doing business in this developing country is a daunting prospect.

The JSE Securities Exchange in Johannesburg, South Africa, seems at first glance like an area where one could try to invest in developing countries with some success. Much ado is made about assisting developing nations in Africa realize their full potential, and this market is a healthy size. But a glance at the numerous rules and regulations involved in investing in this stock exchange makes one wary, and the number of easily accessible news sources, which investors can use to track and predict market fluctuations, are limited.

There are a number of markets in Latin America, with Brazil’s BOVESPA (the Sao Paulo Stock Exchange) leading the pack as a financial hub that holds social responsibility as one of its main goals, both in its treatment of its employees and in the facilities and types of investments it promotes. With a long history of over 100 years, they offer stability and promise as it moves forward. Compared to the other developing countries listed above, Brazil has a higher rate of market capitalization, and BOVESPA itself offers a clear and concise summary of its policies and investment opportunities.

The areas of investment are also clear, meaning that while stock markets are hardly a game for naive investors, BOVESPA’s efforts to make their operations transparent and understandable make this a more manageable option for someone who wants to try doing business in developing countries, without having a degree in finance or world markets.

Brazil’s stock markets dwarf their nearest Latin American counterparts, and while one might think that an oil-rich country such as Venezuela would offer great potential for investors who want to try and do business in developing countries, in actuality this market is extraordinarily small. Over its ten-year history, the IBC has shown first stagnation and then high volatility, spiking in mid-2006 but since then showing no sign of reaching its former high levels, and showing significant dips over time.

There are plenty of opportunities for investors to try doing business in developing countries, and of course there are numerous other option for stock markets in those countries. However, as the largest market in Latin America, willing to undertake business in a socially responsible manner and able to clearly communicate their goals, BOVESPA is an ideal option for investors both in- and outside of Brazil looking to get their feet wet in this promising stock market.

See more at Foreign Policy.
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[tags]Developing countries, Bovespa, investment, stock market[/tags]