Once upon a time, emerging markets presented themselves as a sure growth opportunity to investors -- but that reputation has diminished as fear and turmoil make their way through global markets, leaving few as stable as they were.
BRIC nations (Brazil, Russia, India, and China) are the largest global regions of once-booming economies that are now cooling off.
"We just think our economy and the potential European recession for next year does not bode well for the global economy," said Chip Cobb, portfolio manager at Bryn Mawr Trust in an interview with CNBC. "We like the emerging markets, but we think they're going to be lackluster until Europe gets its act together."
The main drawback for these countries is their reliance on foreign demand. Export-driven economies will quickly feel the impact if larger nations cut down on orders.
CNBC reports The Russell World Emerging Markets Index was down 4.1% in November, and down nearly 14% for the year. This is in contrast to a three-year return of a "robust" 21%.
BRIC countries are falling more than 20% from their early July peak.
So, which markets stand a chance? According to some market pros, the smaller countries of South America, Asia, and elsewhere remain reliable as long-term plays.
Emerging markets will likely continue to grow, just not as impressively. Other markets will still require exports, and most of these nations are undergoing internal changes of their own -- mainly in the middle classes -- that show promise of economic shifts.
Concerned investors may want to update their opinion of emerging markets as an easy and rapidly growing investment opportunity, but there are still opportunities to be found.
For ideas on stocks that might be bucking the trend in BRIC nations we compiled a list of U.S.-traded BRIC companies and searched among the names for those with the highest levels of institutional buying.
Institutional buying (net purchases from mutual funds, hedge funds, pensions, and bank trust departments) signals that sophisticated investors believe there is more upside than downside to the names.
The "smart money" thinks these BRIC stocks have the momentum to push even higher -- do you? (Click here to access free, interactive tools to analyze these ideas.)
1. Isoftstone Holdings Limited
2. E-Commerce China Dangdang
3. MakeMyTrip Limited
4. Home Inns & Hotels Management
5. China Kanghui Holdings
6. TIM Participacoes
8. Simcere Pharmaceutical Group
9. Ctrip.com International
10. Shanda Games
Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned above. Analyst ratings sourced from Zacks Investment Research.
Kapitall's Rebecca Lipman does not own any of the shares mentioned above. Institutional data sourced from Fidelity.
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