The Olympic Committee and the global investment community appear to be on the same page when it comes to the BRIC nations.
After all, three BRIC countries are recent or upcoming Olympics hosts: China hosted the Summer Olympics in 2008, Russia will host Winter 2014 and Brazil will be the site of Summer 2016.
And these countries also represent a growing part of the global investment opportunity set, according to Russell Investments.
“The selection of Russia and Brazil as future Olympic host countries confirms their increasing political, economic and cultural significance and is an opportunity for these countries to showcase themselves—but this visibility alone does not appear to be sufficient rationale for investment,” said Stephen Wood, chief market strategist with Russell Investments in the U.S.
“China did host the 2008 games; but China, while an emerging market, is also the world’s second largest economy and plays a proportionately prominent role in the global economy.”
The weighting of the BRIC countries within the Russell Global Index has grown 5.26% since the index’s introduction in 1996, with China one of the major drivers of this growth. At the most recent rebalance of the Russell Global Indexes on June 25, 2012, China remained the world’s third largest country in terms of total market capitalization behind the U.S. and Japan.
Recent research by Russell Investments noted that the BRICs currently display attractive fundamentals, but emerging markets as a whole also pose short-term investment challenges due to the more volatile nature of their economies and markets. Maintaining a long-term outlook with these markets is important.
“The BRIC nations and other emerging markets may represent investment opportunities, but also higher risk, which reinforces the importance of diversifying across asset classes and global markets,” said Wood.
“While the Olympics may help raise a nation’s visibility, investors would be wise to focus on fundamental factors and plan a global, multi-asset investment strategy.”