EMs in anything but Mint condition

New year, new acronym. But is ‘Mint’ really such a breath of fresh air, or just another waft of hot air?

EMs in anything but Mint condition


Yes, in an interview with the BBC, Jim “Mr Bric” O’Neill coined his latest acronym to describe the next economic powerhouses – Mexico, Indonesia, Nigeria and Turkey.

All four are emerging, or perhaps frontier, markets that have been on investors’ radars for some time (and indeed covered in Portfolio Adviser). But is there really a case for singling these counties out in particular over, say, other eastern European markets or the Mena (Middle East and North Africa) territories?

Desirable demographics

In their favour, the Mints all have favourable demographics and, Turkey aside, they are big commodity producers. It is hard to disagree with O’Neill that in the right circumstances they have great promise for economic growth, in the long term at least.

The problem is that while the quartet may have much in common in terms of growth potential, it doesn’t necessarily mean that politically or culturally they will all harness this in the same way.

Neither, from an investor’s point of view, does it necessarily make sense to group these countries together as one investment case. Identification of the Brics in 2001 may have earned O’Neill many plaudits and he was indeed right to single out today’s biggest investable emerging markets, but their individual stock markets have all travelled south in recent years.

A look at the performance of Allianz BRIC Stars fund versus the much wider global emerging markets universe (see chart) reveals much in this respect.

Even if they wanted to individually invest in the Mint countries, retail investors – for now at least – have few options beyond a handful of passive funds. Even then, they may be better off getting access to these economic successes via other countries, e.g. South Africa as a gateway to Nigeria, or the US for Mexico.

Fresh ideas

In recent months, I’ve heard convincing cases for Fiji, Argentina, Romania and Taiwan, but hey I’m not a celebrated economist… and I’m also not entirely sure my acronym works so well.

It’s 2014 and emerging market investors are desperate for some cheer, and a “fresh” new story, but for me Mint can be herded in with the Piigs, Civets and the ‘Next 11’ as nice ideas, but with little relevance for investors today.


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