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Friday, 17 August 2012

BRIC, bricks and bric-à-brac: the Battle of the Acronyms

Acronyms. You know, those often pesky multi-letter combinations, usually given to some form of natural pronunciation. Acronyms, the bane of trade mark prosecution practice ("please advise if the acronym has any significance in the industry", the trade mark examiner will invariably ask). We don't mean IBM or AOL, which are simply abbreviations of the company name and which come to serve in addition as a service mark/trade mark. No, we mean hard-core acronyms, like KISS, which provide a catchy mnemonic to the full verbal phrase(for those of you who might know this one, "keep it simple, stupid!", which is a modern way conveying the same notion as medieval ancestors embodied in the phrase 'Occam's Razor').

Perhaps no acronym had greater influence on the world of finance and investment than that offered up in 2001 by Jim O'Neill, a senior member of the Goldman Sachs investment bank, when he came up with the acronym BRIC. O'Neill was not referring to bric-à-brac (ornaments of minor value) or a building brick (used since ancient times--just check the biblical book of Exodus). Rather, O'Neill had created a novel and powerfully catchy acronym that was intended to encapsulate the leading national candidates from the emerging world for economic stardom in the new millennium. O'Neill brought these four countries together--Brazil, Russia, India and China-- and called them the BRIC countries. And so the BRIC acronym was born.

From that day onwards, BRIC came to stand for the inexorable realignment of world economic and ultimately political power that would be engendered by the collective influence of these four countries. The sound of BRIC conveys strength, firmness and staying powerand so O'Neill, time after time, in written and oral form, reminded us of the ascendant future of the BRIC countries. Suddenly, investment houses began to offer funds that invested in the BRIC countries. Not Brazil alone, nor India alone, but the four of them together. Just ask this Kat, as he parted from a certain amount of his hard-earned cash to invest in one of these BRIC-denominated funds. With a name like BRIC, how could this Kat possibly lose?(wrong on that one, I am afraid).

Indeed, this Kat doubts that he would have invested in the fund if it had borne any other name, even if the investment portfolio was the same. To the contrary, so familiar had this acronym become to this Kat by 2007 that he wanted to be a part of the BRIC mystique. For the record, despite the rich psychological pull that the term came to enjoy in the financial world (to invest in the "Brazil, Russia, India, China" fund was one thing, but to invest in the BRIC countries was quite another), this Kat found no registration or application on the USPTO database for the acronym regarding financial services or the like. The acronym appears to be available for use by anyone.

But the BRIC, or BRICS acronym (as South Africa was sometimes joined to the group -- and hence to the acronym), appears to have spawned a raft of competitors. One need look no further than the 9 August article by Eric Martin in businessweek.com entitled "Move Over, BRICs, Here Come the MISTs" here. The article describes a rash of new acronyms, beginning with O'Neill's latest creation--the MIST nations--as he and others try to cash in on the drawing power of the acronyms in helping to fuel interest in investment funds. As a result, we now have Mexico, Indonesia, South Korea and Turkey brought together as the MIST countries, being the key economic drivers for the N-11 fund (this Kat is not quite sure what the "N" stands for here).

However, this KAT is not certain that MIST will have the drawing power of BRIC, given its evanescent and ethereal nature. One need merely compare MIST with BRIC to appreciate the unique character of the BRIC acronym. But O'Neill and Goldman Sachs are not alone. The article reports that Citigroup has come up with the CARBS fund, standing for Canada, Australia, Russia, Brazil and South Africa, derived from the claimed fact that between 25%-50% of the world's commodities come from these five countries. That may be true, but the acronym CARBS does not hold a candle to BRIC, denoting, as it does, potential flab, if not outright obesity. What gives one a greater sense of security about the underlying fund, BRIC or CARBS? To this Kat, the answer seems obvious.

There is one more acronym for a fund, this time given by Black Rock. The acronym is CASSH, but the motivation for the acronym is a bit too obvious, intending to designate--you guessed it--"fiscally strong CASSH economies." You can probably guess the countries included--Canada, Australia, Singapore, Switzerland and Hong Kong. Still, given a choice, would I prefer to invest in a BRIC or a CASHH country? Hard to say, but this Kat is still partial to BRIC. There is no inflation risk in a BRIC as opposed to CASSH. 

There is one more acronym mentioned in the article. When economic matters started to deteriorate in various countries in southern Europe, someone (this Kat is not certain who) came up with the acronym PIIGS (Portugal, Ireland, Italy, Greece and Spain). While this acronym was once the rage, it has apparently lost its attraction more recently, properly so, in this Kat's view. BRIC, MIST, CARBS and CASSH can all be justified, but the PIIGS acronym has crossed the line--irreverently witty, lacking all gravitas and bordering on vulgarity. This Kat will say it one more time--the winner is still "BRIC". May it and the countries that this acronym represents flourish, despite the current economic slowdown that all of them are experiencing.

More on KISS here.
More on Occam's Razor here.
More on bric-à-brac here.

7 comments:

Anonymous said...

I have always found the inclusion of Russia in the group of emerging, dynamic economies misleading. While Brazil, India and China clearly are economic powers of the future, Russia is a declining power, not least due to its demographics but also the fact that like a classic third world country, it is totally dependent on exports of raw materials. The only difference is that as an ex-superpower, it has some (still) useful military technology and of course its nuclear weapons, but from a purely economic point of view Russia's best days are clearly behind it.

Anonymous said...

I like the article. But have to add: acronyms disgust me. There is something utterly totalitarian and bureaucratic about them. "Life under the One Ideology in a Corporate State" ...

Anonymous said...

MIST has rather unfortunate connotations in German. It stinks.

Robert Cumming said...

While you're on the topic, you might want to check out the VISTA: Vietnam, Indonesia, South Africa, Turkey, Argentina (emerging market economies).

Anonymous said...

Oh you could have some fun with this. I assume that a fund catering to investors in Mongolia, Uzbekistan, Paraguay, Papua (New Guinea), Estonia and Tajikistan isn't to have many takers, for economic or branding reasons.

Rob Harrison said...

A MIST fund is definitely not one for a German investor. It means turds or dung.. On the other hand the dung beetles that thrive off their food are probably good metaphors for investment fund managers.

Nick Bassil said...

Surely from a purely feline perspective, Friday's post should mention the CIVETS group of countries..!

http://www.economist.com/blogs/theworldin2010/2009/11/acronyms_4

Colombia, Indonesia, Vietnam, Egypt, Turkey and South Africa

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