1. Emerging Market Economies: Does this classification still make sense?
Panel 4 – Developing Economies
World Federation of Exchanges
Paulo Oliveira Jr.
Chief Business Development Officer

2. Emerging Markets: AWorld Bank definition and the conventional wisdom to be challenged
The World Bank classifies member economies according to gross national income (GNI) per capita
Low Income Emerging Markets: USD 975 or less
Lower Middle Income Emerging Markets: USD 976-USD 3,855
Upper Middle Income Emerging Markets: USD 3,856-USD 11,905
Developed Economies: USD 11,906 or more
However, the concept became popular to designate nations in a TRANSITION PROCESS or IN A CATCHING UP PATH

3. Emerging Economies have attained a relevant position among the top markets
Emerging Markets have attracted attention because of their dynamic growth, therefore developing a leading role in the global economy
The BRICs are among the top ten economies in the world
GDP OF SELECTED COUNTRIES IN 2008
In USD billion
INTERNATIONAL RESERVES OF SELECTED COUNTRIES IN 2009
In USD billion
Developed Countries
Emerging Markets
Source: IMF
Source: IMF and ECB (Jul09 and Aug09)

4. Emerging Markets growth has reshaped geopolitics on a global basis
The “so-called” emerging markets are leading the recent recovery
These economies established a new benchmark for global economic development, leveraging their strength on the international arena
GDP PROJECTION
Developed Economies
GDP PROJECTION
Emerging Economies
Source: IMF

5. MSCI INDEX PERFORMANCE IN 2009
Return in Emerging Markets reflects investors confidence in the potential of such economies
MSCI Index represents economic performance and market expectations from the most sophisticated investors in the world
MSCI INDEX PERFORMANCE IN 2009
Developed Countries
Emerging Markets
Source: MSCI
Data as of 28th September 09
Note: South Korea is classified as a Emerging Economy by MSCI

6. MARKET CAPITALIZATION AND GDP OF SELECTED COUNTRIES IN THE END OF 2008
Liquidity depth of emerging capital markets is advancing within the G-20 economies
MARKET CAPITALIZATION AND GDP OF SELECTED COUNTRIES IN THE END OF 2008
Spain
Note: Snapshot of the end of 2008 reveals the full impact of the global financial crisis. In December 2007 Brazil Capitalization was over 80% of GDP and in June 2009 is around 60%.
Source: Goldman Sachs Research Report

7. Emerging Markets sustainable achievements are undisputable and globally recognized
Is such classification still applicable and reasonable? The Brazil repositioning case as a crisis aftermath
ARGENTINA, BRAZIL, CHINA, INDIA, INDONESIA, MEXICO, RUSSIA, SAUDI ARABIA, SINGAPORE, SOUTH AFRICA AND TURKEY ARE ALL G-20 MEMBERS

8. Brazil remarkable resilience during the crisis anticipates a huge potential for growth
BRAZILIAN INTERNATIONAL RESERVES
NET TOTAL EXTERNAL DEBT TO GDP (%)
USD billion
PUBLIC SECTOR NET DEBT TO GDP (%)
TOTAL CREDIT OPERATIONS TO GDP (%)
Source: Central Bank of Brazil

9. Brazilian excellent fundamentals attract liquidity available after crisis deleveraging
International investors have kept their confidence even under extreme scenarios
Reliable and vibrant markets have sustained a steady flow of foreign investments
NET FOREIGN INVESTMENTS
IN THE BRAZILIAN STOCK MARKET IN 2009
USD million
FOREIGN INVESTOR PARTICIPATION
IN THE BRAZILIAN STOCK MARKET
USD million
16 billion in 2009
*Up to September 18th
Source: BM&FBOVESPA

10. New capital flows reinvigorate the Brazilian Exchange role in financing development
Regulation, transparency and improved corporate governance have reinforced the Exchange as a promoter of economic development
Raising capital in the Exchange became fashionable and profitable
IPO – CAPITAL RAISED BY SHARES ISSUES IN 2009
in USD billion
TOTAL CAPITAL RAISED BY SHARES ISSUES IN 2009
in USD billion
Source: WFE
Note: Up to August
Source: WFE
Note: Up to August

11. Emerging markets : an elusive concept that has to be revisited by market practitioners
The financial crisis has provided evidence that :
Some emerging countries have built advanced regulation and effective financial infrastructures that withstand volatile markets more efficiently
Some emerging markets have developed original risk management solutions and transparency rules that better cope with financial institutions leveraging
Some emerging economies have created comprehensive corporate governance rules that promote disclosure more widely
New possibilities for developing capital markets are rising
New models for economic development are shaping
Old fashioned capitalism analytical framework is being challenged
Not every country needs to follow the path of more mature and developed economies
In a multipolar world the name of the game is full and open dialogue, not only East West, but also NorthSouth
There are plenty of lessons to be learned and experiences to be shared

12. Emerging Market Economies: Does this classification still make sense?
Paulo Oliveira Jr.
CEO of BRAiN – Brazil Investments and Business T: