BRIC is an acronym for the combined economies of Brazil, Russia, India and China. The BRIC countries have seen their stock markets plummet along with the rest of the world during this economic crisis. Now is a great time to invest in these developing countries because they are oversold and they still have high growth potential.

Why you should invest in the BRICs? What is the best way to invest in each individual country?

To answer that first question, the bottom is in for the BRICs and you can make some hefty profits if you invest at their current levels.

India and China will become the world’s leading suppliers of manufactured goods and services, while Brazil and Russia will become the main suppliers of raw materials.

The BRIC countries typically have lower labor andproduction costs, therefore several companiesare looking into new opportunities for foreign expansion and trade in these developing countries.

Brazil

In the past Brazil had high inflation, but the economic climate has been quite stable under President Lula da Silva.

Brazil’s ethanol industry is very strong and is growing. The country turns a large portion of their sugar cane crop into fuel for their cars. The world is seeking alternative sources for traditional fuels and Brazil is well positioned to take full advantage of this.

Brazil’s economy is stable and the country is a great place to invest for the long run. During a recent trip to Brazil, I observed that the economy is booming and the land is rich with an abundance of natural resources.

The best way to play Brazil: iShares MSCI Brazil Index (EWZ). This Exchange Traded Fund holds a nice basket of Brazilian stocks and seeks to mirror the Brazilian stock market as measured by the MSCI Brazil index.

Russia

Russia has some big negatives with political issues and organized crime among the main concerns. Investors are concerned about investing in a Russian company that could be nationalized overnight. We hear little about investment in Russia these days and most experts say to avoid Russia. But I disagree, the Russian market is way oversold and now is a good time to be a contrarian investor and invest when no one else will.

Bottom line: The Russians are more like Americans than you would think. On a recent trip to Moscow I observed that the Russians are a hard working and productive people that just want the best for their families and are seeking a better quality of life.

The energy sector in Russia is still a powerful force in the world and their cheap assets are quite attractive. Russia is one of the largest producers of palladium, platinum, diamonds, nickel and gold. Russia is truly a natural resource power house and should do well as commodity prices recover.

The best way to play Russia: Market Vectors Russia ETF (RSX). This Exchange Traded Fund holds a nice basket of Russian stocks and seeks to mirror the Russian stock market as measured by the DAX Global Russia+ Index.

India

India has the great long-term potential due to their stable economy and manufacturing potential as a low-cost producer. And, consumer demand is exploding as India’s standard of living increases. India still has a considerable amount of protectionism in place, but these protectionist ways are gradually being lifted.

Many people in India speak English therefore many companies based in English speaking countries have sales and service operations in India.

India has the advantage of having a highly skilled and educated work force which has lead to a strong software development industry.

The best way to play India: PowerShares India (PIN). This Exchange Traded Fund holds a nice basket of Indian stocks and seeks to mirror the Indian stock market measured by the Indus India index.

China

China still has a communist dictatorship that runs the country, but they are open to free trade and capitalism. China is the main outsourcing location for manufacturing today. In China, labor is still very cheap and logistics between China and the U.S. are very good. China will remain the top low-cost producer for manufacturing for years to come. And, Beijing is taking full advantage of low prices for natural resources by bolstering its supply

Furthermore, higher disposable income in China is leading to exploding domestic consumption, and retail sales are hitting new record levels as a result.

According to the World Bank, China will grow by 6.5 percent this year.

The best way to play China: iShares FTSE/Xinhua China 25 Index (FXI). This Exchange Traded Fund holds a nice basket of Chinese stocks and seeks to mirror the Chinese stock market measured by the FTSE/Xinhua China 25 index.

The Exchange Traded Funds I have suggested in this article give you immense profit potential. They are easy to buy and these ETFs are a great way to grab a stake in the top developing countries without having to buy stocks overseas. These investments are diversified, have low fees and are very liquid which will help you build your wealth over time.

Best Wishes,
Ted Peroulakis