Financial Poise
Iceland Investment Opportunities

3 Overseas Markets (That Still Are) Terrific Investing Opportunities

A Fresh Look at Iceland, Botswana and Chile

[Editor’s Note: An earlier version of this article was first published June 9, 2015. This version has been updated with current statistics. The article’s author, Mike Brady continues to endorse these three countries as investment opportunities.]

Overseas markets are loaded with opportunity, but for many investors, skepticism still outweighs the intrigue of global investing. Even after deciding to invest overseas, many stick to a few tried and true countries or stocks to build portfolios. However, with the right knowledge and timing, reaching outside the norm of international investing can bring back big returns.

There are many things to consider when looking at foreign equities, including:

  • Politics
  • The area of investment
  • Rules and regulations in the country where the investment is hosted

Knowing how to compare and contrast those elements is crucial in deciphering which overseas markets are worth it – and which ones you should steer clear of.

[Editor’s Note: Interested in additional insights on overseas markets? Check out “Why International Startups are Attracting U.S. Venture Capitalists.”]

The Politics of Overseas Markets

First, the politics of the country should be considered. If a country has a relatively new form of government – or experiences quick growth, but the institutional changes haven’t caught up – then that is an area to avoid. Another element to consider is the political risk. Changes in public policy, corruption and revisions in codes and regulations are all things that should be researched as well as avoided. While it is impossible to prepare for all political risks, the more you know about them, the better protected you and your investments will be.

Overseas Markets’ Rules, Regulations and Area of Investment

The area of investment, along with rules and regulations, should also be highly researched before making an investment decision. Oil, gas, and mining have the highest risk of being affected by political events, as do many other utilities. Foreign companies that are less affected by outside forces such as politics or the environment are a much better idea. It is also important to look at the repatriation rules, and whether or not you can get your money out.

[Editor’s Note: For a deeper dive into the legal and technical details of investing in overseas markets, check out our webinar “Doing Business Abroad-101.”]

The country in which the investment is held is one of the most important factors to consider. Knowing the culture of the country is just as important as knowing about its politics and economy, and it can save you a lot of trouble and money. To give a couple of examples, some cultures accept lying to save face, and some have negative attitudes toward foreigners and foreign investors. These are important things to consider before investing, and it could even be worth hiring a team that has local expertise by investing in a mutual fund. As a sole investor living in your host country and investing in another, it is very hard to understand the intricacies, culture and fine print like a local would.

With all of that being said, there are a few countries where I see intriguing opportunities for investment. These may not be countries that one would normally consider, but given their current circumstances, they are ones that should be given some thought.

Iceland

  • 2017 GDP growth +3.6%
  • Not a member of the EU, but enjoys EU-related benefits like free trade
  • Full member of European Economic Area
  • Stable government, with good degree of financial oversight
  • Due to hydroelectric and geothermal power, world’s largest clean energy producer per capita
  • Diversifying economy
  • 11th in economic freedom worldwide, with a flat 20% corporate tax rate

Botswana

  • Long-standing tradition of representative democracy since independence in 1966, with uninterrupted democratic elections
  • Judiciary independent of the executive and legislature.
  • Nationalization prohibited by constitution
  • Least corrupt country in Africa, and ranks close to Portugal and Israel, according to Transparency International
  • 28th out of 167 states in the 2018 Democracy Index
  • Highest sovereign credit rating in Africa
  • 4th in Africa in the property rights index

Chile

  • Democratic systems robust since 1990
  • Good regulatory oversight, with developed and stable financial sector
  • Central bank key inflation target of 3%
  • Economic freedom index is 18th worldwide
  • Low unemployment
  • Good infrastructure

If I suggested those countries to you before reading this article, you might have looked at me like I was crazy. However, by looking at all of the factors that play into a good overseas investment, these are three very good opportunities. By following the practices outlined above, thoroughly doing your research, and knowing what level of risk you are willing to take, foreign investments can serve you and your portfolio very well moving forward.

Like what you just read?

Then sign up to receive our weekly Financial Poise newsletter, our take on the most relevant and topical business, financial and legal issues affecting investors and small business owners.

Always Plain English. Always Objective. Always FREE.

About The Financial Poise Editors

Financial Poise helps trusted advisors (accountants, attorneys, business brokers, consultants, financial advisors, investment bankers, etc.) by providing a meritocracy-based platform on which to demonstrate their thought leadership.

View all articles by Financial Poise »

follow me on:
>