Rise of Brics Economy and Its Impact on Global Stock Markets

Topics: Stock market, Emerging markets, BRIC Pages: 37 (9558 words) Published: April 2, 2013
IRACST – International Journal of Commerce, Business and Management (IJCBM), ISSN: 2319–2828 Vol. 2, No.1, February 2013

Rise of BRICS Economy and its Impact on Global
Stock Markets
Naganathan Venkatesh
Research Scholar, NITTTR,
Chennai, India
Abstract The world is changing and becoming increasingly
multipolar due to the emergence of China, India, Russia, Brazil and South Africa forming so called BRICS. The global influence of America is fading out due to the recent decline in their stock market and the emergence of other markets. The framework of the global economy has changed dramatically due to the collapse of Lehman Brothers in 2008. The change in swift happened from G7 to G20 (group of world’s largest 20 economies) and this G20 comprises of these five nations from BRICS. Unlike 2009 the world economy is expected to have a positive growth in future, considered high economic growth by China and India than US. The world sees

BRICS as the emerging economies and many enterprises has started moving out to these countries as they look promising. With China emerging as a superpower followed by India, BRICS has turned into major player in the global economy, that is expected by the world economists to shape the 21st century.

This paper aims to study the trends, similarities and patterns in the activities and movements of the BRICS economy to its other
counterparts, as this could help the investors to learn about the financial happenings in these five nations. The details are collected through available secondary data’s and also by conducting economic research. The analysis is done using various statistical methods. This paper focuses to help the investors in knowing the development of various markets among the BRICS nations and invest accordingly. As each market is inter dependent on each other, this study aims to learn how the economic development in BRICS nations led to major financial changes in other developing nations.

Keywords- BRICS - Brazil, Russia, India, China, South Africa; OCED - Organization for Economic Co-operation and development



The communal strength of the BRICS economies is of ever
increasing importance to the strength of the global economy. At the same time as matured economies across the world
struggling with immense budget deficits, weak growth and
rising unemployment, the BRICS are mounting swiftly, lifting people out of poverty and driving the global economy. The
manner in which leaders in the troubled Eurozone recently
pleaded with these markets for funds to help ease the
sovereign debt crisis marks yet another critical step in the switch of economic power from ‘west’ to ‘east’. Of course, when measured on a per capita basis, the GDP of BRICS
economies still are lagging behind the G7 countries. However, on an absolute basis, they are catching up fast. According to Grant Thornton International Business Report 2012, the

BRICS are estimated to contribute for 37% of global
development in the period 2011-16, with China alone
contributing 22%. This will increase the BRICS share of
global output from 19% to 23%. In the meantime, the share of global output produced by the G7 economies will decrease
from 48% to 44% over the same period.
Moreover investment activity in BRICS countries seems
healthy which is estimated that it will have 47% increased
investment in plant and machinery and by 46% in R&D during
the year 2012. Across the G7, investment activity looks slower with net 31% and net 17% planning to increase investment in
plant and machinery and R&D respectively. These statistics
and information summarizes the importance of BRICS in the
modern world business community and rising concerns for
Europe and other developing nations. [Grant Thornton
International Business Report 2012]
I believe that it is important to analyze the stock market
efficiency of rising countries on a regular basis as the
efficiency has concerns for...

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