A geographical shift to emerging markets, particularly BRIC countries

There seems to be a push-and-pull effect that will accelerate the fund activity and investment in countries such as Brazil, Russia, India, and China (BRIC). Investment is already happening and a number of specialist funds have already been established by both domestic and foreign investors. But this investment is anticipated to increase significantly through a combination of fewer opportunities in established markets and a strong pull from the scale of opportunities available in these emerging economies. This pull effect is apparent not only in the size of the potential market but also in the strong belief that that market is underpinned by a stable political, legal, and economic environment. There is growing evidence of a shift to the largely undeveloped markets found across much of Africa and parts of South Eastern Asia, such as Vietnam. An example of this is the joint venture between Morgan Stanley and Orascom Construction Industries.8

The challenge remains that many of the opportunities in emerging markets will be focused on asset development rather than existing and established assets. These opportunities present different country-level risks as well. Fiscal pressures in developed markets may encourage governments to go ahead with some infrastructure asset sales, thereby weakening the pull effect.