What Are International and Emerging Markets? - dummies

What Are International and Emerging Markets?

By Matt Krantz

Before you can fully get the most out of your online investment strategies, you need to understand international stocks and emerging markets. The best way to understand them is, of course, to check out the definitions.

International stocks: Shares of companies based in nations in the developed world that have established economies. That includes nations such as the United Kingdom, Japan, France, Germany, Switzerland, Australia, the Netherlands, Spain, Italy, Sweden, Hong Kong, Finland, Belgium, and others.

International stocks are tracked using internationalmarket indexes. Just as the Standard & Poor’s 500 index tracks large U.S. stocks, international market indexes track international stocks.

One of the most popular international market indexes is MSCI EAFE. This index, usually just called the EAFE, tracks stocks of companies from European, Australasian, and Far East markets, hence the name EAFE. MSCI, the provider of the index, offers additional information about the index on its website.

Emerging markets: The up-and-coming nations that are rapidly expanding and experiencing robust economic growth. Generally, investors think of nations such as Brazil, China, Mexico, South America, and Taiwan as examples of emerging markets.

U.S. and international stocks have an index. Guess what? So do emerging markets. One of the most popular indexes of emerging markets stocks is the MSCI Emerging Markets Index. MSCI’s website contains more information about its emerging markets index.

Another emerging markets index that’s closely watched is S&P Dow Jones’ BRIC 40. The S&P BRIC 40 tracks stocks of companies hailing from Brazil, Russia, India, and China. If you’d like to dig more into the S&P BRIC 40, the website allows you to see what stocks are in the S&P BRIC 40 as well as how the index has performed.