A new world for stocks

Emerging-market stocks are set to grow significantly in market value as their economies expand.

By Kim Peterson Sep 8, 2010 3:58PM
cash globe © PhotoAlto/SuperStockAt the rate things are going, China will have the world's largest stock market within two decades, according to analysts at Goldman Sachs.

And the market value of stocks in emerging markets could hit $80 trillion, overtaking developed nations, the analysts added, as reported by Bloomberg. Emerging nations are growing their economies faster, and could nab as much as 55% of the world's equity capitalization within 20 years.

Wall Street is all over this one. Look for emerging-market stocks to start filling in a larger chunk of investment portfolios as we head to this new reality.

You can already see this trend in the MSCI Emerging Markets Index (EEM), which has nearly doubled in the last 18 months. Investors have put more money into emerging-market equity funds for 14 weeks in a row now, Bloomberg reported.

The International Monetary Fund expects that emerging economies will expand about 6.4% next year, compared with only 2.4% in developed countries, Bloomberg reported.

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