Emerging market falls: 2007 again, or 2008?
Are recent capital outflows from emerging Asia the start of a downward trend, or just a repeat of March 2007 and January 2008 when even larger drops were followed by recoveries?
The FT’s ‘beyondbrics’ emerging market blog puts it down to “events in Egypt, profit-taking or rising inflation,” but in the past week US$7 billion has quit global emerging market funds. China, India and Indonesia lost investment at double the previous week’s rate. Beyondbrics notes the difference between 2007 and 2008′s larger falls: March 2007 saw a quick recovery with commodity prices remaining stable throughout, whereas in 2008 the MSCI Asia ex-Japan index declined by as much as 60% over a longer period before rising again, and commodity prices rose fast at the same time. Commodity prices are once again high, stoking fears of inflation and perhaps spooking the emerging world’s fickle investors.
source & article: Financial Times beyondbrics
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