Global View – Investing in Emerging Markets

A: Dad, I’d like to borrow some money.

B: Sure, Johnny, how much do you need? Five bucks?

A: Come on, Dad, I need thirty thousand. I wanna get into the market. You know, I’m tired of hearing all this news about the economic downturn, the inevitable recession, people stuffing their money in their mattresses

B: I don’t know about that; with all the uncertainty in the market right now, it would be a very unwise decision to invest. I don’t know if you’re aware son, but there has been a lot of turmoil in the markets recently

A: But look at it this way, every challenge is an opportunity. And anyway, I’m not talking about investing in the domestic market. There are emerging markets that promise great returns. Look at China, for example;

B: Come on son, you’re looking at this too naively, the Chinese market has exhibited a great deal of instability, and their currency has been devalued by almost a whole percentage point.

A: Fine, then! If that’s the way you feel, so be it. But you’re losing out on a great opportunity here. I’m going to go hit up Mom for the cash.

Key Vocabulary

inevitable: unavoidable

nest egg: money that is saved to pay for something in the future, usually a house, or retirement

turmoil: a state of confusion, disorder, disturbance

stimulus package: amount of money the government uses to improve the economy

emerging market: nations undergoing quick industrialization

devalue: reduced in value

hit up: ask for money

Supplementary Vocabulary

depreciation: an decrease in the value of something

appreciation: an increase in the value of something

inflation: an continual increase in price

developing economy: growing economy

rapidly developing country: countries undergoing quick industrialization

industrialized nation: nations that have developed factories and businesses