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INTERVIEW-Jim O'Neill: BRICs, MINTs strong despite emerging market wobbles

Source: Reuters - Tue, 25 Mar 2014 16:44 GMT
Author: Reuters
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* Investors have shunned the BRIC acronym as returns dwindle

* BRIC, MINT countries still best destinations, O'Neill says

* Nigeria, Turkey hit by political turmoil

By Tim Cocks

LAGOS, March 25 (Reuters) - The large, fast-growing emerging market countries dubbed the BRICs and MINTs are still likely to be the most promising investment destinations over the next decade, despite emerging market turbulence, Jim O'Neill, who coined the terms, said.

Former Goldman Sachs economist O'Neill came up with the name BRIC in 2001 to group Brazil, Russia, India and China as countries whose growth will shape the world economy in the coming decades.

This year, in a series on BBC radio, he championed the MINT group of countries, similarly blessed with fast economic growth and large, young populations - Mexico, Indonesia, Nigeria, Turkey - as the next economic giants after the BRICs.

"The BRIC and the MINT countries, if I'm right, over the next decade will ... shape the world economy's development," O'Neill told Reuters on Tuesday on the sidelines of an Africa Finance Corporation conference in Nigeria's commercial hub of Lagos.

"And if that's the case, they will be the most successful places in terms of investments too."

O'Neill's coining of the BRIC acronym spurred a rash of funds focusing on these countries - a consequence he told Reuters he never intended - but anxiety about emerging markets has triggered a pullback over the past year.

BRIC funds held 9 billion euros ($12.41 billion) at the end of last year, from 21 billion euros at end 2010.

This has been largely driven by the U.S. Federal Reserve's tapering of its bond-buying programme, which exposed how vulnerable frontier and emerging markets can be to hot money.

It also has begun to dawn on investors that economic growth does not always mean higher stock market returns, which can be hindered by corporate governance problems or dodgy accounting.

"Fed tapering is why the masses are exiting emerging markets but that's because they're all like sheep," O'Neill said.

"Greed and fear are close cousins. People are in love with emerging markets one year, next minute they hate them."

But O'Neill said two countries that responded to tapering with sound policies - India and Indonesia - had done well.

"What the whole episode of the last years shows is that emerging markets can't rely on generous external circumstances being persistent," he said. "You've got to do better."

Russia's annexation of Crimea has put it at risk of sanctions. Turkey and Nigeria have been mired in political squabbles that have hurt their currencies. Nigeria has battled to maintain the naira, spending billions of dollars of its oil-earned forex reserves, especially after the president suspended central bank governor Lamido Sanusi last month. Sanusi was an outspoken critic of the government graft.

The underperformance of BRICs over the past three years has put many investors off investing by acronyms, but O'Neill said a fairer comparison was to look at the way the BRIC index has outperformed the developed markets since 2000.

Global companies had had huge successes by focusing on them.

"What is GE other than a BRIC stock? Look at Apple : 20 percent of its revenues are from China," he said. ($1 = 0.7255 euros) (Editing by Alison Williams)

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