New Delhi: The emerging growth markets are offering a lucrative investment option to the global investors with all four economies — Brazil, Russia, India and China — showing a stunning performance in 2006, says a latest report by world’s leading consulting firm Grant Thornton.
“In the past only the main markets could offer a home for foreign companies looking to list their shares abroad. But now the growth markets offer a more attractive alternative,” said Pankaj Karna, partner, Capital markets Grant Thornton India.
These markets offer more visibility, lower costs and access funds available for investment in some cases.
As per the Global Growth Markets Guide, published by Grant Thornton International, these markets could become even more attractive after the flexibility for unlisted firms to list abroad becomes concrete in terms of regulatory perspective.
In 2006, India’s credit rating was revised for the first time and raised to investment grade. The year saw $5.63 billion being raised through 91 initial public offer (IPO).
India’s market capitalization rose 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 for 2006, which was just $9 billion in the same year,” Harish H V, partner, Corporate advisory services Grant Thornton India said.
In China’s case, $97 billion was raised through IPOs and in the secondary market in all the three stock exchanges — Hong Kong, Shanghai and Shenzhen.
By December 2006 China had a market capitalization of $2,850 billion.
As many as 62 new companies got listed on HKSE alone. 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 China, the worlds largest IPO to date, both Bombay Stock Exchange and National Stock Exchange hosted the largest ever Indian IPO of DLF worth $2.26 billion.
For Brazil too, 2006 was an outstanding as the benchmark Bovespa index rose 33% and FDI grew 25% to $19 billion.
The Brazil 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 posted a strong performance with the stock market capitalization touching $1.1 trillion, propelled by rapid economic growth and political stability.
The growth markets analysed are those which have been in existence for at least four years, have over 150 lsited firms and a market capitalisation of $2 billion at least.
As per the Global Growth Markets Guide of Grant Thornton International, AIM has become the market of choice for growth companies, attracting more listings in 2006 than all of the other leading world markets combined.