Aside from particular company difficulties, emerging market investors must frequently monitor currency and commodity swings in ways that developed market investors do not. Because emerging market economies is frequently more reliant on commodity exports, this is the case. When commodity prices fall, exports suffer, and the country’s currency falls, making it more difficult for local businesses to repay loans denominated in, say, US dollars. The BRICs – Brazil, Russia, India, and China – are inextricably linked to emerging markets. It may seem strange that these four countries are labeled developing markets, given their status as some of the world’s greatest economies. Keep in mind, however, that their gross domestic output per capita remains modest. Consider these emerging market stocks to buy in 2021.
Baozun (BZUN)
Baozun, a Chinese e-commerce company, assists brands with their e-commerce strategies by selling their products directly to consumers online or by providing other services such as digital marketing, customer service, and warehousing. E-commerce is an important way for many people to buy goods while maintaining social distance during the pandemic. This appears to have helped Baozun. The company’s unaudited financial results for the first quarter showed total net revenues of $308 million, up 32% year over year, and income from operations up 313 percent. It’s also worth noting that Baozun’s first-quarter performance in 2020, during the early days of the pandemic when global markets were tanking, showed an increase in total net revenue of 18.4 percent – despite a decrease in net income from the previous year due to rising expenses.
Eletrobras (EBR)
Eletrobras, also known as Centrais Eletricas Brasileiras, is Latin America’s largest electric energy company. This emerging market stock appeals to Dave Iben, chief investment officer at Kopernik Global Investors because it is one of the world’s largest producers of cheap, greenhouse gas-free hydroelectric power. Brazil’s economy, Latin America’s largest, has been recovering since 2015 when it fell into recession due to factors such as lower prices for Brazil’s main commodities of oil, sugar, coffee, and metals. However, investors often view the utility sector as defensive because households require electricity regardless of the state of the economy, leaving Eletrobras in a relatively strong position due to its large role in generating and transmitting electricity in Latin America’s largest economy. To top it off, Eletrobras, according to Iben, is trading at a low price.
Vale S.A. (VALE)
Brazil-based Vale is a world leader in the production of iron ore, nickel, and copper, three of the world’s most widely used metals. Vale’s logistics network, which is used for maritime terminals, railroads, and ports in Brazil and other parts of the world, is another aspect of the company’s operations. Vale may be well-positioned to succeed because the global economy will demand raw materials such as iron ore, which is one of the company’s most important products. Vale has a number of mine pools, indicating that it has a lot of production and a lot of sources for its assets. VALE also pays a competitive dividend, yielding 3.5 percent at the time of writing, and the stock is up about 27% this year.
