Russia's Economy

Former finance minister Alexei Kudrin said on May 24 that Russia's economy has a 50 percent chance of slipping into recession due to the crisis in Europe, the buyer of more than half its exports. Russia's gross domestic product may grow as much as 4 percent this year, more than the government's previous projection of 3.4 percent, Economy Minister Andrei Belousov said on July 20.

While O'Neill includes South Korea in the MIST grouping, the nation differs from the other three in demographics, development and wealth. Known as one of the Asian Tigers as it grew an average 9 percent from the 1970s until the Asian financial crisis in 1997, South Korea will expand 2.9 percent this year, according to the median estimate of analysts surveyed by Bloomberg.

Aging Society

South Korea lacks the youth that O'Neill says will help drive growth in the other MIST nations. Only about 16 percent of South Korea's population is under the age of 15, compared with at least 25 percent in Mexico, Indonesia and Turkey, according to estimates by the New York-based United Nations.

South Korea "happens to be the only populated country that in my lifetime has transformed its income from that of an African country to being that of a G-7 country," O'Neill said. "It's an example that all these other countries can learn from."

The MIST nations may not outperform the BRICs for long, especially now that China's government is stepping in to prime the economy, O'Neill said. Moreover, the Shanghai Composite's decline has left it valued at 9.6 times estimated profit, compared with the three-year average of 14.7. The MSCI BRIC Index trades for about 9 times estimated profit, compared with 13.5 times for the S&P 500, data compiled by Bloomberg show.

Economic Weight

The recent underperformance in BRIC equities isn't reason to give up on the long-term potential of economies that grew at an average pace four times faster than the U.S. from 2001 through 2010, O'Neill said. He forecasts that the BRIC nations will grow an average of about 6.5 percent a year through 2020, compared with 5.5 percent for the N-11 group.

O'Neill says he has three times turned down requests from Goldman Sachs salespeople to start a fund focused only on the MIST countries, and not only for economic reasons.