August 9th, 2012. Mexico is spearheading the growth of the so-called MIST countries, leading this block to outperform the BRICs in the past year, as reported this week by Bloomberg news. Whereas Brazil’s Bovespa Index grew only 2.8%, Mexico’s IPC Index (MEXBOL) grew by 11% in the past year.
The MIST bloc – an acronym of Mexico, Indonesia, South Korea, and Turkey – is a group of emerging economies conceived of in early 2011 by Goldman Sachs’ Jim O’Neill. The MIST countries represent $3.9 trillion in GDP and 500 million people, and are the four biggest markets in the firm’s “Next Eleven” emerging economies investment fund, which also includes Bangladesh, Egypt, Nigeria, Pakistan, Philippines, Vietnam, and Iran (although no investments are actually made in Iran).
Jim O’Neill is the same economist who denominated the BRIC (Brazil, Russia, India, and China) group in 2001. After the consolidation of the ‘BRICs’ as a group, foreign investment flooded into these emerging economies, and largely led the trends in emerging market investing for a decade.
While the BRICs still dominate the MIST countries and N-11 fund in terms of sheer numbers, representing $13.9 trillion in total GDP and 2.9 billion people, Goldman Sachs’ N-11 fund grew at 12% this past year, whereas its BRIC fund grew at only 1.5%.
The first lesson here is that less traditional investments in emerging markets such as Mexico, Indonesia, South Korea, and Turkey are offering much greater returns to investors and companies. Who would have thought that Bangladesh would be part of one of Goldman’s highest performing emerging market funds? Being ahead of the curve and going off the beaten path to find new opportunities can have great returns.
The second important observation that everyone should be taking away from all of this data is that, year after year, the emerging markets that are offering real investment and business opportunities are diversifying. No longer are we just talking about the BRICs, but also the MIST bloc, and others such as The Economist Intelligence Unit’s CIVETS (Colombia, Indonesia, Vietnam, Egypt, Turkey, and South Africa). The growing importance of emerging markets in the future of the world’s economy is now beyond doubt.