The next big thing for investors seems to be an area or country with a high growth rate. Since we’ve already found the international market to be fickle, and with the weakness of the Sterling in 2013, we thought we’d look at some of the best and most prosperous places to invest in for 2014, along with the benefits and limitations that come along with them.
(For the full details see Axia FX Foreign Exchange in 2013 Report.)
China and Indonesia
Countries such as China and Indonesia can seem like a safe investment one month, but move far down the list the next. Once a source of high growth and a favourite for investors, they are now thought of as a pariah with many choosing to look elsewhere for new opportunities.
It may seem unlikely, but seven out of 10 fasting growing economies worldwide are in Africa, with a growing middle class population and democracies also on the rise (from three per cent up to 25 in the past 25 years). The Market Vectors Africa Index ETF (AFK) currently invests in the biggest and most lucrative African companies. Many of these investments are in countries that are domiciled offshore, most of which get their revenues from Africa.
Some of the biggest technology companies are already investing in Africa, such as IBM, Microsoft and Salesforce.com. Africa’s fast growth rate makes this an exciting opportunity for investors, and combined with new and expanding research and a developing class system with more disposable income on-hand than ever before, the Sub-Saharan Africa is at the top of the list for investment in 2014. Despite this, the region’s political instability can be off-putting for some investors, with some choosing a very limited exposure (around 5 per cent) for their investment.
The 2012 Wealth Report, commissioned by Knight Frank Research and Citi Private Bank, stated that Hong Kong is set to become the second largest economy in the world by 2050 – measure by gross domestic product (GDP) [per capita). That puts them ahead of the United States by three places. One of the world’s leading financial centres, Hong Kong is known for its free trade agreements, low taxes and capitalism.
There are plenty of benefits along with some risks that investors should consider before making any big decisions. For instance, in a financial crisis, Hong Kong could quickly become a risky place for your investment (an example of this being the Asian Financial Crisis of ’97). Geopolitical issues could be a problem, due to the county’s close proximity to China. But it’s also at the centre of Asian growth, with many of the world’s biggest growing economies based around this strong geographical location.
A great place for profit, Denmark is also one of the top countries for foreign investment in 2014. According to the World Bank, Denmark is the easiest place in Europe to set up a business – all it takes is 24 hours to establish a company and take advantage of some of the most flexible labour market rules. Corruption is low in the country, and was named by ThinkAdvisor as the third most hospitable country for foreign investment. Denmark offers a high degree of transparency and stability, you can investment with minimum risk in a secure environment.
And not so good investments…
The United States currently ranks 22nd, falling behind countries such as Iceland, Estonia, Chile and surprisingly, Cyprus – despite being named along with China and India as one of the top three countries to invest in back in 2012. Ireland is also doing well in the ranking.