A Brief History of Investing in Global and Foreign Markets  

The trend toward investing abroad has been gaining popularity since the 1990s, for several reasons:

Global Innovation: The advancement of technology and economic progress in many of the world’s developing nations have spurred innovation, and investors are eager to invest with innovative companies around the world.

Capitalization of Emerging Markets: Large companies often invest abroad when they see an opportunity to capitalize. This sort of investing has increased in popularity in countries that are experiencing tremendous growth (“emerging markets”). Emerging markets receive welcome investments from abroad, which helps to accelerate their growth. For example, in Israel, global giants such as General Electric (GE), Microsoft (MSFT), and IBM (IBM) have made large investments by buying local companies.

Portfolio Diversification: Money managers often balance portfolios by investing abroad. For example, when a company operates globally as well as domestically, buying that company’s stock exposes you to possible profits in multiple countries. Investing in a company that operates in multiple countries may also be safer, since it protects investors from the economic downturns of a single nation.

Growth Opportunities: Certain countries appear primed for growth in the coming decades. For example, some analysts believe that countries such as Argentina and China will experience a considerable increase in wealth.

Investors have indicated their interest in international markets with the tremendous increase of exchange-traded funds (ETFs) offering exposure to foreign companies.

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