While a few years ago emerging markets were an alternative to developed markets from an investment perspective, currently they tend to attract more attention.
Let’s start by explaining what the phrase “an emerging market” implies. According to the definition, it describes a country that doesn’t have a developed economy yet but the stable (sometimes rapid) growth shows it will become a developed one soon. Countries are defined as emerging markets based on GDP and per capita income formulas. These countries stand somewhere between developing and developed countries.
So what makes an emerging market a better place for investments?
Emerging markets ensure stability and growth in the economy
According to the estimates of the International Monetary Fund, emerging markets tend to grow 3 times higher than the developed ones. As a result, these markets ensure a falling rate of inflation and a stable currency system, which are the most important success factors in the implementation of investment projects.
The economic situation results in an increase in local demand and consumption, as well as in a high level of export. The perfect climate to invest in as the further pickup in growth will work in investors’ favor!
Besides the rapid growth, the economies of emerging markets are also quite stable and predictable. Thanks to it, the governments manage to keep control over the processes. In fact, the pandemic has proved emerging markets are more controllable and they can withstand a market crash much better than the developed ones.
Diversification is more attainable than ever
Any country irrespective of the economic situation can be exposed to market volatility at some point. Sometimes economic, political, and other events causing a storm in the financial market are quite unpredictable. That’s why spreading the risk through diversifying the investment projects is vital.
This is one of the most important reasons that drive investors to bet on emerging markets. The same promising investment projects are much more affordable in emerging markets than in developed ones. The question is why not reduce the consequences of market volatility and wrong forecasts by investing in multiple affordable projects.
Local wages are quite affordable
The rapid economic growth in many emerging markets has brought forth many vacancies and employment opportunities. To meet the demand, these markets have designed workforce policies. Currently, many markets offer a skillful labor force. The important thing to consider is that local wages in emerging markets are much more affordable than in developed ones.
Along with all these advantages, investors should also consider the risks of investing in emerging markets. As a rule, volatility is a common happening in emerging markets. Along with forecasting the market volatility risks, it’s strongly recommended that the investors interested in emerging markets make sure it meets the following criteria:
- The market has relevant workforce/raw materials.
- The monetary system of the country is well controlled and there are not frequent ups and downs. Otherwise, there is no guarantee that the investment project will meet the ROI targets.
Interested in investing in Armenia? The stable growth in the economy, the skilled labor force, and the well-built financial system attract many investors nowadays.
At Kingsmen Investments, we have a number of investment options that ensure a high return on investment. We are ready to address all your concerns and guide you through your investment journey in Armenia. Check out our investment opportunities here or give us a call at (+374) 95 110 301. High return on investment guaranteed!