The Only 2 Emerging Markets That Matter In 2015

Bank of America analysts want to simplify things for emerging market investors in 2015 by dropping the “BR” from the familiar “BRIC” acronym.

For those unfamiliar with the world of emerging markets, BRIC refers to the four most popular emerging markets in recent years: Brazil, Russia, India, and China. A recent report by Bank of America urges investors to focus only on India and China in 2015.

After recent elections in Brazil, analysts see the future of the economy clouded by weak economic growth, uncertain fiscal policy and high inflation levels. The uncertainty is even worse in Russia, where the economy is suffering due to weak oil prices, a deteriorating ruble and international economic sanctions related to the ongoing crisis in Ukraine.

Related Link: Bank Of America: Tech Will Lead The Charge In 2015

Growth Expectations

While Chinese economist Ting Lu expects China’s growth to slow to 7.1 percent in 2015, Bank of America sees the Chinese economy benefiting from new fiscal policy. The Chinese government recently cut interest rates for the first time in two years, which should provide much-needed relief in the Chinese business sector.

Analysts expect other structural reforms in 2015 to narrow the current valuation gap between Chinese state-owned enterprises (SOEs) and their privately-owned counterparts.

Analysts now expect India to surpass Brazil and Russia and become the second largest emerging market in the world by 2017. According to the report, investors should expect the 2014 recovery in the Indian economy to continue into 2015.

“We expect reforms from the Modi government to revive the capital spending cycle and speed up India’s recovery.”

Bank of America mentions investors can look at ETFs or funds that focus on Chinese or Indian investments, such as iShares China Large-Cap ETF FXI and WisdomTree India Earnings Fund EPI.