(Article by Becca Lipman, list compiled by Eben Esterhuizen, CFA. Price data sourced from Yahoo! Finance.)
We're living in a dangerous decade, according to Anil Gupta, professor of strategy at University of Maryland.
He argues that the roles of global economic power are shifting from Western to Eastern economies, kicking off a new era where a Western financial crisis (or boom) will cease to have a significant global impact.
"Over the 100 years from 1950 to 2050, this decade will be seen as the "inflection decade" as both the developed and emerging economies make radical changes to adapt to a more dominant Asia." (Via CNBC)
Gupta and Haiyan Wang partly attribute the transformation in economic influence of Eastern and emerging markets to size, savings, innovation, production, increased economic development, more influential corporate players, rapid GDP growth, and education.
Meanwhile, "as sovereign debt woes continue to plague the euro zone, and unemployment and low economic growth remain stubborn problems for the U.S. economy, there appears a genuine case for arguing that we are in a prolonged period of economic difficulty for the developed world," reports CNBC.
"Developed economies still make up 70 percent of the world's GDP but by 2020 they will account for less than 50 percent," says Gupta. "By 2025 Asia's GDP will be larger than that of the US and EU combined but the global impact of any turmoil will be less."
Significant adjustments will need to be made to accommodate the shifts in economic power. So how can you protect your portfolio from the expected volatility of this decade, and still gain exposure to the economic shift from West to East?
To help you get started, we collected price data on about 180 BRIC stocks, i.e. companies based in Brazil, Russia, India and China. We also collected data on the VIX index, a.k.a. the "fear gauge", and identified the BRIC companies that have a positive correlation to the volatility index.
In other words, if volatility spikes on U.S. stock markets, these BRIC stocks tend to see gains (based on price data over the last 90 trading days). They might provide an interesting hedge for short-term market swings, while giving you exposure to long-term growth trends.
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List sorted by market cap.
1. China Mobile Limited (CHL): Provides mobile telecommunications and related services primarily in the Mainland China. Correlation with the VIX index at 0.546 over the last 60 days.
2. China Southern Airlines Co. Ltd. (ZNH): Provides commercial airline services in the People's Republic of China, Hong Kong, Macau, Taiwan, and internationally. Correlation with the VIX index at 0.535 over the last 60 days.
3. Giant Interactive Group, Inc. (GA): Develops and operates online games in the People's Republic of China. Correlation with the VIX index at 0.544 over the last 60 days.
4. TAL Education Group (XRS): Provides K-12 after-school tutoring services in the People's Republic of China. Correlation with the VIX index at 0.594 over the last 60 days.
5. China Security & Surveillance Technology, Inc. (CSR): Manufactures, installs, distributes, and services surveillance and safety products, systems, and software in the People's Republic of China. Correlation with the VIX index at 0.69 over the last 60 days.
6. WNS (Holdings) Ltd. (WNS): Provides offshore business process outsourcing (BPO) services. Correlation with the VIX index at 0.724 over the last 60 days.
7. Lentuo International Inc. (LAS): Operates as an automobile retailer in the People's Republic of China. Correlation with the VIX index at 0.528 over the last 60 days.
8. Trunkbow International Holdings, Ltd. (TBOW): Provides technology platform solutions for mobile telecom operators under the Trunkbow name in the People's Republic of China. Correlation with the VIX index at 0.63 over the last 60 days.