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It is not easy to start investing directly in an exotic stock market. The language, local conditions and laws appear confusing at first, and though everyone has the option to piggy back on entrenched financial institutions, there is much value to be captured by direct stock market operations. How can individual investors start participating in a stock market in an unfamiliar country, without taking undue risks?

Cement is a relatively safe sector in which to start under foreign stock market conditions. Most emerging markets have attractive rates of GDP growth, serious and sustained government investment in infrastructure and rapid urban development as well. Pastoral communities tend to invest in new residential and storage facilities after bounteous harvests. All this translates in to spells of healthy demand for cement, alternating with spells when supplies become desperately short! It is a common sight in rapidly growing cities to see new construction progressing at a frenetic pace-all of its needs bags of cement!

There have been cases, before the globalization era, when some national governments forced cement companies to sell production at controlled rates, and even exerted some degree of control over distribution. The sensitive nature of this sector means that stock investors should always be alert for signs of regulatory intervention which could depress profits and valuations. Governments normally issue warning statements before taking effective steps to control the business, so the stock market is generally aware of imminent conditions in this regard.

Long term prospects are even more serious from a stock market perspective. Conditions in mines, consumption of water resources and related environmental, safety and wellness issues may all be to unacceptable standards from a contemporary standpoint. Companies may not have the reserves and will to invest in extensive upgrades. Hence, it may be appropriate for stock market investors to book profits from their initial investments and either repatriate funds abroad, or transfer them to value-added branded products and services with large market shares. A bearish phase of the stock market may be the best time to restructure portfolios in this fashion.

 

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