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Emerging Stock Market (Foreign Investment)

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As an investor, what factors would you consider before investing in the emerging stock market of a developing country?

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Solution Summary

This solution is an approximately 500 word essay detailing the concerns of an investor considering diversifying his/her portfolio with stock investments in an emerging market.

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As an investor considering investing in an emerging stock market of a foreign country, there are several things I would consider:

1) How much to invest: As with any investment, a cost-benefit analysis should be considered. Emerging markets are generally very unstable and, therefore, present an extremely high risk investment opportunity. However, this is also fertile ground for enormous potential gain. Because of the risk involved, an examination as to the investment's effects upon the overall volatility of one's portfolio should be considered. In other words, I wouldn't stake a significant portion of my portfolio into this sort of investment.

2) Opportunities for conflict resolution: Does the market afford the investor any conflict resolution arrangements such as arbitration? ...

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