Oil will be a key driver of economic growth in emerging market sectors, making Brazil and Russia attractive countries in which to invest, according to the leader of the product specialist team of a global fund manager.
“Brazil recently discovered a number of oil fields. Ten years ago this country was basically a net importer of oil but it started to become a net exporter of oil roughly three years ago,” Credit Agricole Asset Management (CAAM) head of the product specialist team, Stephane Mauppin-Higashino said.
The Russian economy is also positioned to take advantage of the rise in world oil prices due to proposed seven-year tax concessions for companies involved in the exploration for new oil deposits, Mauppin-Higashino said.
The France-based product specialist said access to oil will help these countries sustain economic growth as CAAM has forecast world oil prices will remain at high levels.
“Even if you would have the price of oil collapsing to 100 [$US 100 per barrel], the earnings growth, which is the one that is basically used by most of the financial analysts, will still be on the increase going forward,” Mauppin-Higashino said.
Also working in Brazil and Russia’s favour is their lack of sensitivity to the US economy in terms of demand for exports from America.
CAAM’s statistics show the proportion of US exports to GDP for Russia was around 2 per cent in 2005 and approximately 3 per cent for Brazil, compared to China that had a ratio of 6 per cent.
