emerging markets

Emerging markets

The financial markets of developing economies.

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Emerging Market

An economy in a country noted for growing liquidity, stability, infrastructure and other positive features, though not to the same extent as exists in the developed world. That is, emerging markets are economies that have increasingly important roles in the international stage and may one day become principal players, but they have not yet arrived at that level. Political factors may help or encumber emerging markets as they attempt to gain wealth and prominence. Major examples of emerging markets are Brazil, Russia, India, and China. Smaller economies, such as Bahrain, Egypt, Colombia, and others are also considered emerging markets. Emerging markets exist in less developed countries relative to the United States and Europe; these countries nonetheless have vibrant, active economies. See also: International development, BRIC.

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emerging markets

Security markets in countries such as Mexico and Malaysia that are still developing their industrial base. Investments in emerging markets entail substantial risk with the potential for above-average returns.

Are the stocks of companies in emerging markets particularly risky?

Investing in emerging markets is considered very risky. The financial markets of developing countries are typically small, with a short operating history. Emerging markets exist in undeveloped regions of the world, which are very volatile and therefore have great growth potentials but also pose significant risks. Corruption, political instability, illiquidity, and currency collapse are just some of the significant risks of emerging regions. Argentina's economic collapse is the latest example of the risk involved in emerging countries.

Thomas M. Tarnowski, Senior Business Analyst, Global Investment Banking Division, Citigroup, Inc.Salomon Smith Barney, New York, NY, and London, UK

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emerging markets

A loosely defined term generally referring to countries with relatively stable governments,developing economies,and an increasing ability to spend money on consumer goods.