New Delhi: The emerging growth markets are offering a lucrative investment option to global investors with all four economies—Brazil, Russia, India and China (more commonly known as the Bric countries)—putting on a stunning performance in 2006, says a latest report published by the world’s leading accounting, tax and business consulting firm Grant Thornton Llp.
“In the past, only the main markets could offer a home for foreign companies looking to list their shares abroad,” said Pankaj Karna, partner, capital markets, Grant Thornton India. “But now the growth markets offer a more attractivealternative.”
These markets offer more visibility, lower costs and access funds are available for investment in some cases.
As per the Global Growth Markets Guide, published by Grant Thornton International, in the Indian context, these markets could become even more attractive after the flexibility for unlisted firms to list abroad becomes concrete in regulatory perspective.
In 2006, for the very first time, India’s credit rating was revised and was raised to the investment grade.
In addition, around $5.63 billion (Rs23,083 crore) were raised through 91 initial public offerings (IPOs).
India’s market capitalization increased to $1,573 billion from $1,061 billion in 2005.
“During 2006, Indian companies raised $19 billion from global markets far exceeding the inflow of foreign direct investment (FDI) for 2006, which was just $9 billion in the same year,” Harish H.V., partner, corporate advisory services, Grant Thornton India, said.
In the case of China, around $97 billion were raised through IPOs and by way of thesecondary market in all the three stock exchanges, Hong Kong Stock Exchange (HKSE) as well as Shanghai and Shenzhen bourses. By December 2006, China had a market capitalization of $2,850 billion. As many as 62 new companies got listed on HKSE alone.
Out of the Top 10 IPOs in Hong Kong, six were Chinese state-owned companies, while the others were privately-held domestic firms.
While HKSE hosted the $16 billion IPO of the Industrial and Commercial bank of ChinaLtd—the world’s largest IPO to date, both the Bombay Stock Exchange and National Stock Exchange hosted the largest- ever Indian IPO of DLF Ltd. worth $2.26 billion.
For Brazil too, 2006 was outstanding as Bovespa index — the country’s main stock exchange — rose by 33% and FDI grew by 25% to $19 billion.
The Brazilian government has invested $230 billion for promoting market reforms in a bid to boost economic growth in the country. Its economic output rose to $1.6 trillion—making it the ninth-largest economy in the world.
Russia also reported a strong performance with the stock market capitalization touching $1.1 trillion propelled by several factors, including the rapid economic growth, political stability and the country’s growing investment ratings.
The growth markets which are analysed are those that have been in existence for at least four years, have over 150 firms listed and a market capitalization in excess of$2 billion.
The report says these economies attracted more listings in 2006 than all the other world markets combined.