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Bric and Brac and the india and china growth story

Its nearing 2010 and I’m actually quite sick of the BRIC acronym. But at least the “B” is in the right place: First!

Brazilian stocks, as measured by the iShares Brazil Index ETF (NYSE: EWZ) are up 96%, year to date.

That’s right. In a year that began with financial Armageddon, Brazilian stocks were barely stymied, paving the way for the huge move in the middle to latter part of the year.

Brazil, Russia, India And China (BRIC)


India vs China – The Race for economic  growth

Most visitors to India and China form their impressions about these countries by comparing such cities as Mumbai, New Delhi, and Bangalore with Shanghai, Beijing, and Guangzhou. The difference between the two countries’ urban centers is truly stark. China’s top cities now look more modern and sleeker than New York or London. Yet one cannot overlook the fact that adult literacy in India runs at only about 61%, far below the 91% figure for China, the 90% figure for Indonesia, and the 89% figure for Brazil.

In 2008, China’s GDP was just a bit more than three times that of India. If India’s GDP grows at 8% to 9% a year over the next decade—a reasonable prediction based on analyses by Goldman Sachs (GS), the U.S. National Intelligence Council, and other analysts—India’s GDP in 2020 will be almost the same as China’s in 2008. sample-1.jpg

(For comparison’s sake, China, using the iShares FTSE/Xinhua China 25 Index ETF(NYSE: FXI) as a proxy, has returned just 46%.)

So given that this is forecast week, I’m going to double-down on Brazil in the coming year.

Fact is, the money flowing into Brazilian corporate bonds, which is fueling the economic boom there, is astonishing. Real-denominated corporate bonds totaled $19.5 billion in the first 11 months of this year, versus only $8.9 billion in the same year-ago period.

And 2010 will likely be another banner year, as the quality of the issuers – the corporations – increases for the year 2010.

Even better, the state-run bank, BNDES, is providing liquidity (about $5.7 billion’s worth) for a secondary market for trading the bonds.

Bottom line, I’m a sucker for a developing nation undergoing such a robust capital market expansion. (Brazil’s international reserves have surged to a near record $238 billion from $206 billion a year ago, as foreign investment in the nation’s capital markets increased.)

But don’t take my word alone for it. Karim Rahemtulla gives his emerging market outlook (and ways to profit) on Brazil, along with the rest of the BRICs.

Shanghai Stock Exchange  Top Chinese stocks

PetroChina (3,656.20 billion)
Industrial and Commercial Bank of China (1,417.93 billion)
Sinopec (961.42 billion)
Bank of China (894.42 billion)
China Shenhua Energy Company (824.22 billion)
China Life (667.39 billion)
China Merchants Bank (352.74 billion)
Ping An Insurance (272.53 billion)
Bank of Communications (269.41 billion)
China Pacific Insurance (256.64 billion)

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