A new era for global growth? The emerging consumer


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I was in Moscow a few weeks ago sitting in on a very interesting panel on the emerging middle class with Columbia professor Joe Stiglitz and Alexei Kudrin, Russia's finance minister. These guys were optimistic about the ability of Russia to grow through modernization, but there are major obstacles here in terms of corruption, infrastructure and demographics -- not all were convinced that this really is the new global paradigm. Decorated CLSA economist Russell Napier noted the return of the U.S. consumer on the back of cheap money will be a bigger element in the next economic cycle, much like last time. Meanwhile, we have to get to that next cycle. Stiglitz was saying that although we feel better than we did in late 2008, we are still only back from the brink, not out of the woods. The fundamental problems of high leverage and excess amounts of real estate supply have not been solved. It is clear, however that emerging markets is a new consumption engine if not the main engine yet. Emerging markets will create 445 million middle class consumers over the next five years. In India , consumption is now a key driver, and the Indian middle class over the next decade will be larger than the U.S. and Europe combined. Plenty of broad ways to play this story via ETFs. From the top down, ECON ( quote ) has the widest mega-cap mandate, but is evenly split between Latin America and everywhere else. Top holdings include ABV ( quote ), WMX ( quote ) and Indonesian conglomerate Astra ( PTAIF , quote ). Below that, you have a choice of consumer discretionary versus staples ETFs in the iShares portfolios KXI ( quote ) and RXI ( quote ). And for more targeted exposure to two of the most vibrant consumer economies out there, BRAQ ( quote ) for Brazil and CHIQ ( quote ) for China.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Stocks
Referenced Stocks: BRAQ , CHIQ , ECON , KXI , RXI

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