It may be time to hold auditions to find a replacement for Russia in the BRIC countries.
The other day, the New York Times dropped this delightful little nugget on those believing that Russia is a suitable place to invest:
Russia’s Kemerovo region has notified ArcelorMittal that it will seize two of the world’s largest steel maker’s mines if production levels do not increase, the Siberian region’s government said in a statement. “If your team is not able to stabilize production at these facilities, then we propose that you hand them over without compensation.”
Nice. The whole BRIC (Brazil, Russia, India, China) theme may be in need of a makeover as it turns out that the former Soviet Republic is still very much up to it’s old KGB-era strong man routine.
The question becomes, what country could replace Russia that’s got the growth and demographic bona fides but a more conducive business climate for investment?
Let’s hold some auditions, American Idol-style, and see how other emerging economies stack up for membership:
Randy: I like what I’m seeing out of Turkey’s National-100 index, a 10.5% advance year-to-date, y’all. I’d say yes.
Simon: This country has a population of 71 million, two thirds of which are aged 15 to 64…that’s an awful lot of productive workers.
Paula: Yeah but guys, Turkey’s economy is only supposed to show flat growth in 2010. I’m sorry Turkey, I think you’re great…just not for this competition.
Paula: Here’s a perfect example of an exciting country, with a $280 billion economy and booming mineral exports.
Randy: Yes, but a lot of those exports are non-industrial diamonds and gold, not a lot of practical uses for what South Africa produces, man.
Simon: I have to be honest and say that that was one of the most dreadful auditions I’ve ever heard. And for a supposedly emerging market, the Johannesburg Securities Exchange has barely recovered this year, up only 4% or so. I’m sorry, South Africa, it’s a No.
Randy: Singapore looks like the Real Deal right about now, the Straits Times Index is already up 35% on the year and shows no signs of quitting. GDP growth for next year is looking like 7 and change percent.
Paula: And didn’t Jimmy Rogers sell his Manhattan townhouse and relocate his whole family there?
Simon: I’m sorry, but I don’t think so. Singapore is as tied to China as you get, they do about 90 billion a year worth of trade together and have longstanding agreements in place that basically make the two economies inseparable. I’m going to have to pass on this, we already have enough Chinese representation in BRIC.
Randy: I gotta keep it real with this one, Dog. Aren’t we talking about an economy that’s basically 100% tied to high oil prices?
Simon: I completely agree with Randy, minus some steel exports, that’s exactly like Russia, which we’re trying to replace in BRIC, the last thing we want to do is add it’s mirror image.
Paula: You guys have the Dubai story all wrong, they’ve been redeploying the oil wealth to stimulate other parts of the economy, like the gold-plated Rolls Royce sector, for example.
Randy: Australia? I thought this competition was for emerging markets only, y’all. I know GDP growth for next year is estimated at 6%, but how old are you, Australia?
Paula: You gotta give it up to them, they have a fully developed economy, yet they’re the key supply line to some of the growthiest economies in Asia. Wait, is growthiest a real word?
Simon: For me, it’s a yes. If we refer to Brazil as the Commodities Supermarket to Chinese growth, then Australia is the Commodities Convenience Store, chock full of metals and minerals, yet right down the street. And Paula, you should read a book one day.
Paula: Look, we all know that the entire economy of Peru is just $127 billion and that’s like 7% of the economy of Brazil. But I think Peru is going to broaden out. Just because it doesn’t have a huge population, doesn’t mean it can’t become a big investment theme. I say Peru deserves a chance.
Randy: It may be small, but it’s growing! I’m feelin’ the growth! 10% GDP! Peru, you’re on fire, Dog. For me it’s a Yes.
Simon: Not to mention a 75% return for the IGBVL stock market so far in 2009, Peru is the very definition of hot. Congratulations Peru, you’re through to the next round.
Randy: You’re going to Hollywood, Dog!
Peru exits ballroom with yellow sheet of paper, vigorously hugs Ryan Seacrest and let’s out celebratory yelp. Assorted family members wipe tears from eyes. Cut to Coke commercial.
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Data Mining Hat Tip: Intern Carolyn