New Emerging Markets: Mexico, Indonesia, Nigeria and Turkey (MINTs)

Global capital is always on the search of the next profitable opportunity and this is the reason why the BRICs or the grouping of Brazil, Russia, India, and China found favor as emerging markets in the last two decades.

As these economies began to sag and saturate, the restless investors began looking for the next set of countries that would welcome them and where the prospects for growth are better. This is the reasoning behind the recent trends towards investing in the MINTs or the grouping of Mexico, Indonesia, Nigeria, and Turkey.

The cornerstone of any investment is how profitable it is over the shorter term and the longer term. Moreover, the investment must return value to the investors and in a globalized world; capital migrates from country to country that offers the best possible business environment for the investments.

This report evaluates the prospects for the MINTs and the rebound of the BRICs and therefore, the opportunities as well as the challenges that each of these groupings promise are analyzed and discussed in the subsequent sections.

Introduction: Are the MINT’s the New BRIC’s?

The acronym BRICs refers to the group of countries Brazil, Russia, India, and China that were predicted to be the next growth miracles after the “Asian Tigers” of South East Asia.

The term was coined by the legendary management analyst, Jim O’Neill who was working with the fabled investment bank, Goldman Sachs, in 2001 when the global investor community needed which grouping would be suitable for investments in the aftermath of the Dotcom crash. This meme of the BRICs being the next economic miracles was soon picked up almost the entire global investor community and indeed, the growth rates recorded by these countries in the last decade justified the hype around them.

The BRICs provided the much-needed tonic for the capital that was seeking returns elsewhere after the saturation of the West. Therefore, as with all revolutionary ideas, Jim’s prediction was so much repeated and picked upon by the experts that this became a self-fulfilling prophecy of sorts.

Fast forward, to the last couple of years and the story is starkly different. Once the darlings of the investment community, the BRICs and especially the first three as China continues to deliver returns despite its teething problems, were besieged by several crises, economic and political as well leading to disappointing returns on the capital invested.

Indeed, all three Brazil, Russia, and India’s economies took so much of a hit that the “investor herd” or the “electronic herd” immediately started to desert these economies.

Of course, with the installation of the new government that is widely perceived to be investor friendly and pro-business and pro-free market, India seems to have started on the road to recovery. Moreover, even Russia with its recent saber rattling geopolitical moves has begun to turn around its economy. Third, Brazil with its hosting of the football world cup seems to be getting its act together.

Having said that, it must be noted that the global investors are always on the lookout for exceptional returns and this is where Jim has scored again with his recent prediction that the MINTs or the combination of Mexico, Indonesia, Nigeria, and Turkey would soon be the centers of the next economic growth story.

Further, the fact that most of these countries were long considered the extension of the BRICs means that this forecast and the subsequent events were also in the reckoning.

Before moving on to the detailed analysis of how the MINTs have the potential to be the sites of the next big thing, it would be useful to consider that global capital is color blind and averse to emotional pulls and this is the reason why the MINTs look like they are about to replace or at least join the ranks of the BRICs.

Opportunities in the MINT Economies

There are opportunities galore in the MINTs and these relate to favorable demographics with a sizeable portion of their populations being under 30 (Turkey), availability of natural resources as the case of Nigeria illustrates, the proximity to the United States as Mexico is and hence, reaping the attendant benefits, and Indonesia, which for long was always in the league of the investor’s portfolios.

Therefore, it is but natural that sooner or later, these countries would catch the eye of the global investors and this is precisely what is happening now as the global capital flits from economy to economy in search of the highest returns. Moreover, the MINTs have other advantages such as capacity for capital-intensive investments as they are yet to be saturated.

Apart from these opportunities, the MINTs are also attractive because the combination of youthful populations hoards of resources, and economic growth for the last five years clocking above 7%, which means that they are ripe for picking.

In addition, they are rolling the red carpet for investors as they have realized that when opportunity knocks, it is better to have the door, as well as the fact that when it rains, it pours. This means that the global investors have at last found a good place for a world that has become weary and wary in the aftermath of the Great Recession.

Next, the MINTs have the advantage of a class of entrepreneurs and businesspersons who are conversant with the western mode of capitalism and who unlike the Chinese who took a decade to familiarize them with Western business practices; can indeed hit the ground running.

Moreover, the fact that all these countries in the MINTs are democratic and have a functioning judiciary as well as a tradition of honoring contractual obligations means that they are poised for takeoff as soon as the global investors come aboard.

With the controls in safe hands, the MINTs can look forward to a win-win situation in the transactions between the investors and domestic businesses.

Challenges in the MINT Economies

However, the picture is not all rosy and there are significant challenges as far as the MINTs are concerned. For instance, Mexico suffers from an apocalyptic civil war between the state and the drug gangs.

Turkey has been beset with political scandals and mass unrest over the elite cornering the benefits of development without leaving much to the masses.

As for Nigeria, China has already made its presence felt there and this leaves the western investors playing second fiddle to it.

As for Indonesia, the corruption there is so rampant that even the employees in the private sector are reportedly prone to bribery and corruption, which for long has been considered as an exchange between the governmental officials and the businesspersons.

Next, the other challenges that the MINTs face are that in a manner similar to the Gulf States who have young and restive populations always seeking their due, the countries of the MINTs also have to reckon with such similar demands from their politically aware and socially conscious youth. This makes the chances for an Arab Spring like protests more probable especially in Turkey and Nigeria where the poor and the youth (not mutually exclusive) are already up in arms over what they perceive as resource grabs by the elites.

Conclusion: The Road Ahead - Conftronting Hype with Reality

When one assesses and evaluates the prospects for the heady predictions around the MINTs, one has to necessarily balance the hype with the reality.

The point here is that it is common for the western investors to play up the economic prospects of countries if it seems that those countries would give them a hospitable place for them to park their investments.

Moreover, the investors mimic the actions of the junkies who are forever on the lookout for the fix and in search of adrenaline pumping opportunities. Therefore, one of the conclusions that this report arrives at is that a healthy dose of reality and a sober assessment of where things stand are much needed.

The other conclusion is that the BRICs seem to be on the ascendancy after the hiccups of the last few years and therefore, it is too early to write them off. Finally, whether it is the MINTs or the BRICs, getting governance back on track is of the utmost priority to longer-term investors and this is where any country has to focus on if it hopes to emerge as a serious contender for global capital.