TIMPs are the new BRICs?

An intriguing piece by a Reuters columnist that posts the theory that BRICs have had their day and it is now the turn of the TIMPs – Turkey, Indonesia, Mexico , Philippines.

COLUMN-BRICs, move over. TIMPs are the new emerging market stars – RTRS

28-Mar-2013 19:30

(The author is a Reuters contributor. The opinions expressed are his own)

By Conrad de Aenlle

LONG BEACH, Calif., March 28 (Reuters) – One day you’re a hot young thing and everybody loves you. Then suddenly you’re more mature, move a bit slower, and some hotter thing is threatening to replace you.

That cruel reality confronts the four large emerging stock markets known as the BRICs: Brazil, Russia, India and China. These erstwhile ingénues have struggled – the MSCI BRIC Index fell 6.5 percent in the 12 months through March 25 – while four smaller markets with an acronym of their own – Turkey, Indonesia, Mexico and the Philippines, the TIMPs – have excelled, recording gains ranging from 9.4 percent for Indonesia to 37.7 percent for the Philippines.

The TIMPs are blessed with rapid growth, as are many emerging economies. The International Monetary Fund forecasts inflation-adjusted increases in gross domestic product this year of 3.5 percent for Mexico and Turkey, 4.8 percent for the Philippines and 6.3 percent for Indonesia.

What made the TIMPs stand out to Bob Turner, who coined the term and is chief investment officer of Turner Investment Partners, a Berwyn, Pennsylvania, asset management firm, is that they possess qualities that should keep them and their stock markets expanding rapidly and profitably. These include favorable demographics and strengthening economies and political institutions.

“They have young populations, with a high number of workers to retirees,” Turner explained. “They also have infrastructure that needs to be built out and banking systems that are underleveraged.” He meant that individuals and governments are not overextended on credit, unlike in many mature countries, leaving room to borrow more to fuel growth.

But not every fast-growing small economy qualifies as a TIMP for Turner. He dismissed other countries that also have young populations and fast growth potential because they lack liquid stock markets, diverse industrial bases or adequate financial and legal systems.