Vietnam is one of six emerging markets that may go on to shape the global economic future

Vietnam is one of six emerging markets that may go on to shape the global economic future

The news last month that PepsiCo is to invest heavily in the Vietnamese market has been followed this week by a significant play in the country by another leading Western FMCG group, Heinz. Both moves give credence to a growing consensus amongst business circles that the South-East Asian country is one of a handful of emerging markets primed for reliable growth and consequently a flurry of investment from the West.

Talk of emerging markets in recent years has been so dominated by the BRIC markets - an acronym first coined at the investment bank Goldman Sachs in 2001 - that the term's constituents, Brazil, Russia, India and China, have left little room for discussion of other markets.

Of course, this has not been without its reasons or merits. The arrival of these disparate markets - conveniently grouped under one banner - as economic giants has altered the balance of global financial power forever. That shift of influence has accelerated over the course of the last two years with the onset of the financial turmoil - as one banking commentator put it this week: "This was very much a Western, not a global, banking crisis."

And the BRIC markets are set to continue their stellar performances with an average GDP growth of 4.9% over the next 20 years, according to the Economist Intelligence Unit. However, their appeal, particularly in 2001, was their largely untapped potential and high return on investment. The growth potential remains, but in many cases it's now priced into the investments being made, which begs the question for investors on the look-out for cheaper places to spend: where next?

Markets such as Mexico for some industries have already taken some limelight. And the media's love of convenient acronyms meant that it was often strong-armed into the BRIC grouping (and we were not innocent), to form the BRICMs.

However, when HSBC's CEO, Michael Geoghegan, identified Colombia, Indonesia, Vietnam, Egypt, Turkey and South Africa as the next tier of exciting emerging economies and called them CIVETS, he displayed not only sound economic judgement, but also a fine understanding of what makes the media tick. No-one likes to pigeon-hole more than the media, and a group of markets named after a small furry mammal ticks all the boxes.

It has taken most of the rest of the year, but sure enough the term CIVETS is starting to stick. The Economist Intelligence Unit has now picked it up, lending greater weight to Geoghegan's forecast.

Like the BRIC markets, the CIVETS bear little in common geographically and there are stark differences between them culturally. But, significant similarities, economically and politically, do set these markets above other emerging economies, making their logic of their grouping far more than merely convenient.

As the EIU pointed out in its assessment at the beginning of August, all six countries share similar demographics - a large, young population - they are all diversified economies and not excessively reliant on commodities; they are marked out by reasonably sophisticated financial systems (at least in the case of the non-Asians in the group), with inflation in check and public debt at manageable levels. Finally, and this is key, they share a political stability that will attract international investment.

The EIU believes that the CIVETS will report an average annual GDP growth of 4.5% over the next 20 years. This may be below the BRIC average, and these markets are unlikely to set the world order on its head the way China and India have done in the last ten years. However, as asset prices and labour costs continue to increase within the BRICs and they move from emerging to established markets, forays into the CIVETS should become increasingly common.