ST PETERSBURG, Russia Concerns about China and Russia are overblown and offer investors a chance to buy into booming growth stories, Jim O'Neill, chairman of Goldman Sachs Asset Management, said on Friday.
O'Neill, who coined the BRIC term in 2001 to describe how the clout of Brazil, Russia, India and China would challenge the West's economic dominance, said jitters about such markets were overblown given such swift growth forecasts for the next decade.
"For those who have a little bit of foresight, it gives them the chance to get in at sensible levels," O'Neill, who helps oversee $677 billion in assets at Goldman, told Reuters Insider television at the St Petersburg Economic Forum in Russia.
"China and Russia are both looking quite interesting because they are cheap," he said. "Contrary to the email I get every two hours about why I should drop the R from BRIC, I quite like Russia."
Anxiety about a U.S. slowdown and inflation in China have prompted the likes of U.S. market strategist Richard Bernstein to talk of "monstrous" risks to emerging markets.
O'Neill said the short-term worries about the BRICs did not undermine the attractive long-term growth story.
"The long-term trend is for the BRIC economies and the BRIC investment theme to continue to be the dominant themes of our generation," he said.
He said that apart from Russia, his other top pick was financial stocks in developed countries, though he declined to name specific stocks.
But O'Neill did say the future of China -- and inflation in particular -- was the one issue that kept him awake at night.
"If this view that is growing, particularly in the (United) States, that China is already going down the hard landing path, that would be a big deal ... I think China is slowing because the authorities are deliberately trying to slow it," he said.
"As soon as we see the slightest sign of inflation starting to turn around, the markets will stop worrying about more tightening," he said.
O'Neill said China, Russia, Brazil and India would collectively have economies bigger than the U.S. economy by the end of this decade and this would have a big impact on who runs financial institutions such as the International Monetary Fund.
He said he thought the slowdown in U.S. growth was temporary but, if it was not, investors should expect a third round of quantitative easing, or QE3 -- a term that describes treasury bond purchases by the central bank to stimulate the flow of credit and investment.
"I am a bit surprised and confused by the evidence that the U.S. has slowed so much. I still suspect it is only temporary and might have something to do with the Japanese supply disruption. If I am wrong then we will get QE3, though it might not be described that way," he said.
(Writing by Guy Faulconbridge, editing by Timothy Heritage)