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Despite the fact that the political and economic landscapes around the world have undergone significant change, high-risk investors still find the added diversity in the emerging market. These industrialized nations with growing populations, swift economic expansion, and deregulation are home to these developing markets. Over a period of years, their living conditions significantly increase, while the value of their currency remains stable. Investors have amazing ideas and opportunities to find market gaps and opportunities to gain a business opportunity for themselves. Despite the many opportunities that are available in the market, there are also challenges and risks that face the emerging market in the effort of identifying and securing business opportunities. In considering the opportunities that exist in the emerging markets and the risk of the investment that still exist in the market, one can support whether the opportunities that exist overweigh the risk in the current world.
The volatility of the financial market can is a critical opportunity in the emerging market that accelerate the potential investors to invest in the emerging market. To support this statement we need to look at the economic fundamentals that are the cornerstone and the support of the developed countries financial market. The most common is the gross domestic product. From the twenty thirteen market research admits a very high gross domestic product value for the grown economies(Bekaert, 1997). This shows how the investors in the emerging market are making profits and the same time the economy is growing at a positive rate.
When the consideration of the emerging stock market it has been increasing in a significant number. From the stock market report in twenty thirteen, the capitalization value read more than ten percent. This shows how the economy is growing at a first rate due to the prosperity of the business and the maximization of the opportunities in the emerging market. The high returns that are recorded in the potential market offer different kinds of diversification benefits. This value shows how the living standards of the investors are significantly increasing. According to the many benefits that are currently being obtained and gotten from the emerging markets, there are still opportunities that still have not been established and need be considered(De Santis, 1997). The investment opportunities in the emerging market are many with substantial returns that are many to be fully and completely maximized.
Also, advancement in technology is another competitive tool that has been used as an opportunity in the emerging market. Technological advancement has a wide range of application in the emerging market. Counties that use technology to provide services in the world market always enjoy the convenient of the technology. Technological advisement that favors the emerging market is crucial in communication. In the business line technology has helped in making the communication simple and most convenient in transacting the business. For example, there has been an online transaction of business in the order that all the users are convenient for it(Frankel, 1996). The booking of various commodities abroad has been made easy and convenient.
The power of technology has created a wide advantage of the trust within the emerging market. The international online transaction of goods using the universal currency is an emerging technological improvement that has been meant to improve and create convenient in the business in the emerging market. The Bitcoin technology for an intermediary in the emerging market has created an opportunity for the banks and other financial organizations and even has created oneness within and across the world. Technology has acted as an opportunity in the world market and has initiated growth of other opportunities. In the networking architecture of the world market, there have been factors that have been developed to curb and make easy coordination and convenience of different things in the world of business(Khanna, 2000). The shipping terms that have been used to relocate goods and avail them to the required destinations of the buyers have been invented with technology that favor and protect the goods from damage.
This technology has created extra opportunities that need to have professionals. Emerging market has created opportunities to solve the convenience of relations(Klapper, 2004). The efforts of solving a problem in the emerging market create an extra opportunity that needs investors to provide investment resources to fit the gap.
In the emerging market, in every effort of solving a problem that affects the convenience of the opportunity, the need creates an opportunity that needs the resources to be provided to have the opportunity maximized. The market is balanced in the way it operates and therefore the potential investors come in and provide resources that are available, and the economy grows.
However, as the economy grows, there have always been some challenges that are prone to succeed in the market. These are the obstacles that have hindered the smooth operation; and growth of the economy(Morck, 2000). In some developed countries, the economy of those areas have been depleted and therefore the economy instead of growing it starts to decrease due to lack of challenge as a result of the following factor that all the investors will always work towards minimizing
The effect of the currency devaluation fluctuations is highly felt in the emerging market. The fluctuation is due to major factors that are detrimental are proportional to the economic growth. The economic performance, capital flows, technical support and the interest rate differentials are some of the factors that affect the rate of currency devaluation in an economy. For example, after a long time of trading in a particular state, the investors always make considerable profits(Bekaert, 1997). In case the currency of this particular country inflates then the investor would incur a lot of costs.
In the current world, there are many economies that have challenges with the currency. In such countries, there will always be a fear for the investors to invest in those areas. When several economies are infected by the same the most of the investors will quite to invest in those areas despite the many opportunities. The exchange rates of those countries become too low for the investors who tend to come in those countries and always be very high for those who want to buy foreign currency to tour other countries. The main disadvantage of this challenge is the merchandise trade. The situation that makes the country to make much export and have very little import to the interior(Frankel, 1996). This makes the value of import to be very expensive and therefore the country with time will not be able to afford to import commodities. The economy of the country is degraded.
The other major challenge to the emerging world market is the trade barriers. Barriers are the obstacles or the challenges to the entry or trade with a particular country. There are some developed countries with growing economies where the economic growth is positive, but the investors cannot access the legal requirements to qualify to invest in those particular countries. All investors should be having the legal requirement for them to qualify to hold and have the stake in the properties. For example, in some countries, the import duties are calculated at a high price disadvantaging the importers. Where the country discourages the act of the investors having a stake of properties in a state then the foreign investors are discouraged to invest in those areas because of the inflexible terms by the government. These are the common barriers that have been here to hinder the investment in most of the countries(De Santis, 1997). In the emerging market, the collateral coordination has been there to try to reduce some of these barriers and create a friendly environment for the trading and for the investors to invest in different places in the world.
To sum up, despite the many risks in the emerging world, the potential investors who have invested in different areas have benefitted a lot. The federals and the state government have been putting a lot of effort in stabilizing and reducing most of the barriers to stop the crisis and improve the level of interactions in different states. Although the risks have been there, those who have invested still claims high profits margins. This is a sure rationale that the opportunities that are in the world market far outweigh the risks that are experienced in the emerging world market. If in any instance when the gross domestic product of the economies are very far positive growing means that the returns on investment are high for both the investor and the economy of the later country
According to my point of view, the opportunities in the emerging market far outweigh the risks that are experienced. The government has invested in working towards lowering the barriers and currency devaluation to keep the emerging market a steady.
Bekaert, G. a. H. C., 1997. Emerging equity market volatility. Journal of Financial economics, 44(4), pp. 29-77.
De Santis, G., 1997. Stock returns and volatility in emerging financial markets. Journal of International Money and finance, 55(9), pp. 561-579.
Frankel, J. a. R. A., 1996. Currency crashes in emerging markets: An empirical treatment. Journal of international Economics, 56(8), pp. 351-366..
Khanna, T. a. P., 2000. Is group affiliation profitable in emerging markets? An analysis of diversified Indian business groups. The Journal of Finance, 26(7), pp. 867-891..
Klapper, L. a. L., 2004. Corporate governance, investor protection, and performance in emerging markets. Journal of corporate Finance, 55(7), pp. 703-728..
Morck, R. Y. B. a. Y. W., 2000. The information content of stock markets: why do emerging markets have synchronous stock price movements. Journal of financial economics, 18(5), pp. 215-260.
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