Emerging markets have reached critical mass to overtake the United States and European Union as the world's largest economic zone, HSBC said on Monday, saying their growth could avert global recession.
The bank said in a research note emerging markets had contributed more than 50 percent of global nominal growth in dollar terms over the last three years and were likely to represent even more as growth slowed in richer countries.
"While it would be premature to assume that emerging markets will be entirely immune from a U.S. recession, the economic and earnings environment in emerging markets is likely to remain favorable, especially relative to the prevailing conditions in the developed world," said HSBC Investments global head of emerging markets business Christian Deseglise.
Good domestic consumption and investment spending in emerging markets remained buoyant despite economic troubles in the United States, on which many emerging economies were becoming progressively less dependent.
It said exports to the United States accounted for only two percent of India, Brazil and Russia's gross domestic product at the end of 2007.
Commodities are clearly anchoring the emerging markets, explains Tim Seymour. It doesn’t surprise me that the iShares MSCI Emerging Markets Index is hitting new highs. However I would be a little cautious at current levels.
How would you trade?
I still like *Cemex,*Posco and *Gazprom , says Seymour, but with volatility at 6 month lows, I’d also be looking at put protection.
Also watch Mobile Telesystems which has earnings coming out Tuesday.
*Indicates company is part of "Fast Money's" Emerging Money Top 20, an index made up of 20 firms poised to profit from explosive global growth.
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Trader disclosure: On May 19, 2008, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Adami Owns (C), (GS), (INTC), (MSFT), (AGU), (BTU), (NUE); Najarian Owns (AAPL), (TSO), (XLF); Najarian Owns (TE) Calls; Macke Owns (DIS), (INTC), (ATVI), (EMC); Finerman Owns (GS); Finerman's Firm And Finerman Own (HD) And (HD) Puts; Finerman's Firm Owns (GLNG), (MSFT), (SUN), (TSO), (VLO); Finerman's Firm And Finerman Own (C) And (C) Leaps; Finerman's Firm Owns SPX Index Puts; Finerman's Firm Is Short (IYR), (IJR), (MDY), (SPY), (IWM)