IB Net Payout Yields Model

The Next BRIC: Indonesia

Most investors are familiar now with the BRIC notation standing for Brazil, Russia, India, and China as standing for the 4 economies with huge populations living on sub-standard per capita earnings, but huge political desires to lift themselves up to European or US standards. Based on the list below, all 4 countries have populations in the Top 10 in the world so its not surprising that a big movement in their per capita earnings combines with the population size could have a huge impact on the world.

What is surprising is that several other countries like Indonesia, Pakistan, Bangladesh, and Nigeria appear on the Top 10 list, but aren't global economic powers. Morgan Stanley thinks that at least one of them should belong with the other growing global powers based on this snippet on Bloomberg. The country is Indonesia and to most peoples surprise they are the 4th most populated country in the world yet they only have the 19th largest economy.

This only means more pressure on the limited commodity and resources of this world. Indonesia growth at 7% will quickly become a bigger player and have a much greater impact. At this point, I don't really have a good investment idea to profit from this growth potential other then inflation trades like ANR, FWLT, MTW, TEX, or X.

The other up and coming economy is Nigeria. With access to huge oil reserves, this country promises to be an up and coming economy with the worlds 8th largest population, but only the 41st largest economy. In reality, we could just lump Nigeria into Africa in general and add them to the list. Africa has a population approaching 1B and is similar to a India, but with huge resources as opposed to education. Indonesia and Nigeria combined have a population greater to that of the US.

One play in Nigeria is Alvarion (ALVR) which just signed a $7M deal to provide Wimax services in that country. ALVR has a pretty decent business in Africa in general and combined with MICC provide decent exposure to the growth in that country via there wireless services.

No matter how you slice it, the world economy will one day be controlled by forces outside the US or Europe if these other countries can continue to grow per capita standards. More to come on this subject as we explore the huge populations outside the industrialized world and its desire to join our ranks. So the BRIC could one day become BRIICN or BRIICA. After all Indonesia is larger then Brazil and Nigeria is larger then Russia. Those 2 countries have a long ways to go, but its likely only a matter of time especially with Indonesia.

Wikipedia Population List

Rank ↑ Country / Territory ↓ Population ↓ Date Last Updated ↓ % of World Population ↓ Source ↓
1 China[5] 1,331,115,200 June 7, 2009 19.77% Chinese Population clock
2 India 1,165,080,000 June 15 2009 17.17% Indian Population clock
3 United States 306,672,000 June 15 2009 4.52% Official USA Population clock
4 Indonesia 230,330,000 June 1, 2009 3.42% Indonesian Population clock
5 Brazil 191,299,948 June 15 2009 2.84% Official Brazilian Population clock
6 Pakistan 166,657,500 June 15 2009 2.48% Official Pakistani Population clock
7 Bangladesh 162,221,000
2.41% UN estimate
8 Nigeria 154,729,000
2.3% UN estimate
9 Russia 141,812,991 June 10, 2009 2.11% Russian Population clock
10 Japan 127,580,000 May 1, 2009 1.9% Official Japan Statistics Bureau estimate


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