The purchase of Chelsea Football Club by a Russian who has since spent £110m on players amply demonstrates that there is big money to be made outside the wealthy West. And investors without Roman Abramovich's resources may be encouraged to learn that emerging markets have outperformed all Western stock markets since mid-March.
Between March and September, stock markets in the Far East grew by 47.8 per cent, Latin America by 43.8 per cent and Eastern Europe by 43.6 per cent. Compare this with a rise of 28.3 per cent in the FTSE All-Share, 24.77 per cent in the FTSE 100 and 25.78 per cent in the S&P 500. These figures, from ratings agency Standard & Poor's, illustrate why investors are getting excited about emerging markets again.
This outperformance is not surprising: it often happens during the initial stages of a global recovery because emerging markets enjoy a surge in exports. But this sector needs to be treated with care: with rises of nearly 50 per cent already, you may have missed out on the easy gains. Even fund managers in emerging markets are cautious about growth rates over the next few months.
In the short term, the big downside risks are global economic slowdown, China overheating, geopolitical instability and the reappearance of Sars. Indeed, Robert Burdett, joint head of the multi-manager service at investment house Credit Suisse, says: "We have reduced our overweight position [in the emerging markets] after the recent gains."
Of the regional emerging markets funds, he particularly likes Thames River Eastern Europe, Atlantis Asian Recovery, Threadneedle Latin American Growth and Solus Eastern Enterprise. Of the global funds, he picks out those managed by Thames River Capital, First State, Gartmore and Baillie Gifford.
Rory Landman, head of the emerging markets team at Thames River Capital, argues that there is less reliance on external trade than in the past, making for stronger growth. "What is different this time is that China has gradually become more important to Asian and global output. The rest of Asia is much less indebted than during the 1997 and 1998 crisis, while there has been restructuring of econo- mies and companies over the past five years. Balance sheets have been strengthened and foreign exchange reserves have doubled from $500bn (around £300bn) to over $1 trillion.
"Growth is being generated internally to a greater extent than ever before, especially through China. Korean exports to China were larger than those to the US for the first time in February and have kept growing since then."
The potential of China - with a population of a billion, a cheap labour force and the ability to attract manufacturing and service jobs from developed countries - is significant but there are fears the economy could overheat. Hugh Young, managing director of Aberdeen Asset Management Asia, believes the central bank's decision to rein in lending will stop this happening, though he warns it is not easy to make money out of China.
"Investors look at the fact that Shanghai has economic growth of more than 10 per cent a year and China as a whole is expanding at 8 per cent," he says. "But Chinese companies are not cheap."
One market favoured by both Mr Young and Angus Tulloch, manager of the First State Global Emerging Markets fund, is India. With the economy growing at more than 5 per cent a year and cheaper valuations than in China, Mr Tulloch has taken an overweight position in India, including a stake in Hindustan Lever, a subsidiary of Unilever.
Another country that has attracted a lot of attention since 1998 is Russia, which Mr Tulloch prefers to invest in through Turkey because it has "better corporate governance. We like the brewer Anadolu Efes, for example, which has the franchise for Coca-Cola in Central Asia and has one of the largest breweries in Moscow."
Thames River's Mr Landman "does not see any particular problems on the horizon" for Russia even though it is facing presidential elections next year. "There is no stress in the economy. The foreign exchange reserves are increasing and restructuring is continuing, although there is still much to do on banking reform."