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Introduction to Investment Funds – The CIVETS Nations

Throughout 2011, a great deal of attention was devoted within the financial world to the potential of Investment Funds for investors willing to look at the CIVETS nations. Extensive analysis and commentary was provided on the growth and development of the economic landscape in Colombia, Indonesia, Vietnam, Egypt, Turkey, and South Africa.

A host of investments have been launched in the last 12 months and activity within these nations has continued to grow as bold investors look to target the world’s fastest growing economies.

The reasons for this increased activity are varied.

For example, the CIVETS nations have a collective population of around 600 million representing around 8% of the world’s population, a population that is characterized by being young and ambitious. Therefore, the growing consumption of these nations means that market demand is strong for basic products and this is reinforced by population dynamics that seem fixed on growth in all aspects of life.

In this respect, CIVETS nations reflect many of the social and industrial qualities inherent in larger developing markets, such as the BRIC economies: Brazil, Russia, India, and China. In fact, in some cases, the growth rates of the CIVETS nations now exceed those of the established BRIC countries.

Another crucial feature is that, when viewed as a whole, the CIVETS nations do not have the chronic debt problems that they are currently experiencing in the developed world. This is an important positive feature for investors looking for both short-term and long-term returns.

Here we take a closer look at the key characteristics of the CIVETS nations and their influence on the potential of the Investment Fund. Remember that the value of investments can fall as well as rise and you may get back less than you invested.


The current Government of Colombia has devoted much time and effort to stabilizing the security situation throughout the country and developing the national infrastructure.

It has been very eager to increase trade and commercial activity in all of its industrial regions and has successfully reinvested portions of oil revenues to greatly improve the business and social environment.

A fact that is often overlooked is that Colombia is the third largest exporter of oil to the US and therefore has a very strong foundation for development due to this constant flow of income.

In addition to oil, the country’s main industries are coal, gold, textiles, food processing, clothing and footwear, beverages, chemicals, and cement, giving it a strong presence in major US commodity markets

According to a report in The Guardian online, its economy grew by 4.3% in 2010, compared to 2.8% in the US, which is an obvious draw for foreign investors. Only time will tell whether this growth will continue and whether or not relative political and social harmony can be maintained.


With an estimated population of 245.6 million, Indonesia is the fourth most populous country in the world. Almost half of the economy is industrial.

The Indonesian government has also stated its desire to see Indonesia develop to become one of the world’s 10 largest economies by 2025. If this goal is successfully completed, early investment in Indonesian assets could generate strong returns.

Like other CIVETS nations, Indonesia can be seen as a positive investment destination due to positive demographics such as a young and ambitious population with rising levels of disposable income, thus market demand is strong and strengthening. Its position as a manufacturing center also helps to have a positive long-term outlook.

According to the Wall Street Journal, some fund managers view exposure through local subsidiaries of multinationals better because of the strength of their existing structures.

As a result, the long-term outlook looks healthy for investors.


The low cost of labor and the further development of manufacturing infrastructure means that Vietnam has grown in its attractiveness to foreign investors despite its economic problems in the last 5 years.

Its economy is 41% industrial and the World Bank projects 6% growth this year, reaching 7.2% in 2013, according to the Wall Street Journal Online, which is a good prospect.

The potential for lower taxes for fund management companies is also an interesting development in this particular market.

However, there are persistent concerns regarding Vietnam’s uncertain outlook for interest rates and inflationary pressures, as well as the fact that the country continues to pursue a policy of rapid growth. Standard & Poor’s downgraded Vietnam in 2011 amid warnings that the banking system was vulnerable to shocks and raised concerns about bad debts.


Egypt’s main assets include fast-growing ports on the Mediterranean and Red Seas, linked by the Suez Canal, which are seen as potentially important trade hubs for connecting Europe and Africa, as well as vast untapped natural resources.

Egypt also benefits from strong trade and investment relations with the EU. In 2010, agriculture made up about 10% of the economy, industry 27% and services 64%.

Egypt and China have also signed agreements that will see the two nations collaborate on car production and distribution in North Africa. This is positive news for Egyptian companies and also indicates China’s commitment to the North African market.

Chinese automaker Zhejiang Geely Holding Group and Egyptian auto assembler GB Auto SAE expect to produce as many as 30,000 cars a year within a few years, and aim to increase that number to 50,000 a year, a Geely source told the Wall Street Journal. .

However, it must be remembered that the prospects for continued strong investment in Egypt are seriously clouded by an unstable political situation.


The Turkish economy has proven resilient to the global recession and the Turkish government’s budget and public debt position is arguably significantly better than that of many eurozone countries.

The growing influence of the private sector in recent years coupled with increased levels of efficiency and resilience within the financial sector has had positive results. A stronger social security system has also helped create a stable investment environment.

Turkey also has experience recovering from economic difficulties, as it did successfully after its own banking crisis in 2001.

Apparently, Turkey has also benefited from the economic problems of neighboring Greece. For example, Turkish imports from Greece increased by almost 40% and the number of Greek companies registered to do business in Turkey increased by 10.4% in 2011, according to the Turkish news site Hurriyet Daily News.

This would seem to suggest that Turkey offers strong investment prospects. However, according to a Financial Times blog, Turkey’s “huge” current account deficit, now around 10% of gross domestic product, is a concern, but they also state that Turkey’s economic performance looks extremely healthy compared to their European neighbors. Its GDP grew 8.9% in 2011

South Africa:

South Africa is a country that exhibits both emerging and developed market qualities. Foreign investors have historically been attracted to South Africa’s rich and abundant natural resources, particularly gold. Foreign direct investment is also steadily increasing as the government encourages more international companies to locate there. But it is the mining sector that continues to dominate in South Africa due to the large stock of natural resources and the stability of the already existing mining infrastructure.

The surge in commodity prices is fueled by renewed demand in its auto and chemical industries, as well as the 2010 FIFA World Cup, which has helped South Africa resume growth after slipping into recession for the global economic recession.

However, it is worth noting that South Africa had the slowest growth of all civets last year and has suffered from 25% unemployment. The International Monetary Fund’s World Economic Outlook noted: “A rise in unemployment, high household debt, low capacity utilization, a slowdown in advanced economies, and substantial real exchange rate appreciation are causing a hesitant recovery.


It is clear that there is significant potential for investment fund growth in all CIVETS nations. The demographic composition and industry structures mean that there is a positive financial outlook for hungry investors.

However, optimism should be tempered for a number of reasons and some analysts warn against rushing into some potentially unpredictable and unstable markets.

Political and social turmoil, as well as inefficient and ineffective corporate governance standards, result in an uncertain economic environment and deep currency fluctuations. The CIVETS nations are currently far behind the recognized leading emerging markets of the BRIC countries and the most astute investors will only contribute a manageable amount of their investment portfolio to the markets within the CIVETS nations.

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