After the
fall General Motors, "once the embodiment of US economic might,"
Americans should get used to the fact that "upstarts" like China and
India are "ready to rule world economy," a US commentator said.
"We may not like to admit it, but it's
time to get used to this fact: emerging markets such as China and India
are quickly becoming the world's new economic powerhouses," Paul R. La
Monica, CNNMoney.com editor at large wrote in a commentary Wednesday.
He noted that the Centre for Economics
and Business Research (CEBR), a London-based economic consulting firm,
had predicted emerging market economies may overtake the US and the
rest of the Western world this year instead of 2015 as predicted
earlier.
However, "This doesn't necessarily mean
that the United States is doomed to a massive economic fall from
grace," La Monica said. "In fact, it does not appear to be a
coincidence that hopes of a US economic recovery have helped lead a
surge in stocks in China, India, Latin America and other emerging
markets."
Noting that with the United States
showing some signs of economic stabilisation, emerging markets to have
snapped back, he said: "So rather than bemoaning the West's inevitable
slip in economic importance, investors need to embrace emerging markets
and realize that interdependence is key to the global economy."
"China and other emerging markets have
tied themselves intricately to the US economic system," he said citing
James Swanson, chief investment strategist with MFS Investment
Management in Boston. "As the US recovers, that means that there will
be a lot of earnings growth coming out of China and other emerging
markets like India and Brazil."
With that in mind, Swanson said
investors need to be thinking more about buying shares of multinational
US construction firms that will benefit from increased demand in
emerging markets, as well as mining, energy and manufacturing companies
in China, India and Brazil.
"So if companies such as Alcoa, Ford
Motor and ExxonMobil are in your portfolio, you might also want to take
a look at Aluminum Corp. of China (ACH), India's Tata Motors (TTM) and
Brazil's Petrobras (PBR) as well," he said.
"US investors can't have 80 percent to
90 percent of their portfolio in the US anymore," Swanson said. "The
old notion of having 5 percent to 10 percent in international stocks is
outdated. Americans should increase their weight in emerging markets." SOURCE
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