Investing in BRIC Countries: Evaluating Risk and Governance in Brazil, Russia, India, and China

Chart a course for success in the fertile terrain of BRIC investing!The world’s largest and fastest-growingemerging markets are those of the BRICnations—Brazil, Russia, India, and China.Combined, these countries house more than40 percent of the world’s population, andtheir respective GDPs are growing at animpressive rate.This economic success comes partly from atrend toward good corporate governance, aconcept virtually unheard of in these fournations just a decade ago. Still, the BRICshave a long way to go. Corruption, doubledealings,and other conflicts of interest areregular business practices for far too manycompanies. Although investing in BRICnations can be wildly profitable, you mustfamiliarize yourself with the realities oftheir corporate governance to avoid catastrophe.With Investing in BRIC Countries, youare equipped with the best available toolfor detecting the signs of poor governance.Edited by Standard & Poor’s® equityresearch and governance group, it detailsthe group’s highly successful approach toanalyzing risks in emerging economies.Withcase studies illustrating the effectiveness ofcorporate governance scrutiny, Investingin BRIC Countries examines the economicstructure and governance status of eachBRIC nation—and then explains how to:Detect the malevolent influences of apowerful minority of shareholdersProtect yourself from misleading or falseaudits and risk assessmentsRecognize regulatory weaknesses withregards to shareholder rightsDistinguish effective boards of directorsfrom weak or corrupt onesAs the financial crises in Mexico, Russia,and Asia during the 1990s prove, corporategovernance is the pivot on which anemerging market’s success or failure hinges.Before entering one or more BRIC markets,perform the due diligence they require.Investing in BRIC Countries is the besttool available for mitigating your exposureto risky deals and other problems that canarise when dealing with international companies.

Svetlana Borodina is director of corporategovernance at Standard & Poor’s® EquityResearch in Moscow. She served in a numberof senior executive positions in theareas of investor relations and financialcommunications with TNKBP and Sibneftoil companies.Oleg Shvyrkov is associate director forStandard & Poor’s® Governance Servicesgroup and serves as lead analyst on corporategovernance scores and GAMMAscores at MTS, MDM Bank, EroChem, andother companies in Russia, Kazakhstan,and Brazil. The authors live in Moscow, Russia.