Mania for emerging markets recedes
Thursday 02 February 1995
The lesson of the last few weeks, especially from Mexico, is that investors should look first for a strong currency, where recent capital and current account flows combine to create a net inflow of capital. If this is backed by tight monetary conditions the prospects are better.
The sell-off in emerging markets last year was aggravated by the steady tightening of liquidity in the US dollar. US monetary conditions are currently very tight and close to the turning points of 1981 and 1989. A turnaround will be helpful for emerging markets.
Barings identifies two groups of emerging markets: those which, like Mexico, South Africa, Hong Kong and Malaysia, are relatively sensitive to world economic activity, and those, such as India, China and Russia, which are not integrated with world marketforces. Both groups boom when government policy is favourable to foreign investors and money flows in, before a flood of new issues gluts the market and prices fall back.
Different emerging markets benefit at different stages of the world cycle, with strong inflows into interest-rate sensitive markets such as Hong Kong, the Philippines and Singapore in 1991-93, switching to trade and growth-based Mexico, Taiwan, Turkey, South Korea and Poland in 1993, while the last 18 months have favoured resource-rich markets such as South Africa, Brazil, Chile and Peru.
- 1 To help fuel their propaganda machine against the poor, our government has now decided to redefine the word 'welfare'
- 2 Anti-gay hate preacher accidentally tweets 4,000 followers cartoon clip of him 'confessing' to be a 'homosexual sodomite'
- 3 Woman opens professional cuddling shop – gets 10,000 customers in first week
- 4 Grayson Perry: London needs affordable housing because 'rich people don't create culture'
- 5 Kenya bus attack: Al-Shabaab militants kill 28 non-Muslims who failed to recite Koran
Ryan Gosling granted temporary restraining order against a woman 'convinced she was his twin flame'
Jennifer Lawrence sings in new The Hunger Games: Mockingjay Pt 1 clip on YouTube
Anti-gay hate preacher accidentally tweets 4,000 followers cartoon clip of him 'confessing' to be a 'homosexual sodomite'
Woman opens professional cuddling shop – gets 10,000 customers in first week
Grayson Perry: London needs affordable housing because 'rich people don't create culture'
Rochester by-election: Ukip gains second MP as Tory defector Mark Reckless holds seat
'Beast of Bolsover' Dennis Skinner takes Ukip MP Mark Reckless to task moments after he is sworn in
Rochester by-election: Labour MP Emily Thornberry resigns after posting white van and England flags tweet
France 'blocks' Russian sailors from boarding a warship
Revealed: How the world gets rich – from privatising British public services
Myleene Klass: Ed Miliband 'strikes back' by comparing UK's need for Labour's mansion tax to Hear'Say track
iJobs Money & Business
Voluntary Only - Expenses Reimbursed: Reach Volunteering: Age Concern Slough a...
Voluntary Only - Expenses Reimbursed: Reach Volunteering: Crossroads Care is s...
£20000 - £25000 per annum + OTE £35,000: SThree: We consistently strive to be ...
£50000 - £90000 per annum + benefits: Ampersand Consulting LLP: Markit EDM (CA...