Emerging markets refer to developing countries where investors perceive an affinity for higher returns accompanies by greater risk. The affinity for higher returns is generally underpinned by the notion that the identified developing countries are growing fast, have young populations and consumption rates that will eventually be on par with developed countries.

Many acronyms have been coined to describe a selection of emerging markets, some of the most common are:

  • BRIC – Brazil, Russia, India and China
  • CIVET – Colombia, Indonesia, Vietnam, Egypt, Turkey and South Africa
  • MINT – Mexico, Indonesia, Nigeria and Turkey

Emerging markets are often grouped in ways such as the above, based on a belief in similar characteristics, e.g. commodity production characteristics.

Emerging markets are associated with greater risk for investors due to factors such as the greater possibility for political tensions and lack of stability.