Emerging markets are attracting new investors 2012
Deserted last year, emerging markets are attracting new investors thanks to the policies of central banks very flexible and lower inflation, but the slowdown in their economies and soaring oil prices could quickly chilling.
2011 was an anus horribilis for these financial markets. The index measuring their stock performance (MSCI Emerging Markets) tumbled more than 15% and the BRICS (Brazil, Russia, China and India) have unscrewed more than 20%.
But the tide has clearly turned. Since the beginning of the year, the Moscow stock market was soaring 25.5%, that of Sao Paulo by 18%, while Shanghai has taken 11%.
Traumatized by the debt crisis in Europe and fears about global growth, investors have withdrawn $ 45 billion of funds invested in emerging markets in 2011, according to data collected by the Swiss bank Pictet. In less than two and a half months, they have already replaced 25.
First reason for this revival, ample liquidity through policies very flexible central bank America and Europe.
Overseas, the U.S. Federal Reserve (Fed) has ensured that it would keep its key rate to a record low until at least late 2014. The European Central Bank (ECB) has, for its part, in two refinancing operations three years, to inject more than 1,000 billion euros in the financial system of the euro area.
"These markets also benefit from lower inflation risks," notes François Théret, a specialist emerging markets at Natixis AM.
India is well managed, leading between March 2010 and October 2011 a very active policy of monetary tightening to curb its runaway inflation. It has reached in February its slowest pace in over two years (6.5% against nearly 10% a few months earlier).
For Frédéric Rollin at Pictet, "systemic risk on a bankruptcy or an explosion in the euro area have all but disappeared, leading to a real revival of investor appetite for emerging market assets still considered risky."
But the slowdown in economic growth in emerging countries could, if confirmed over time, cool appetites.
China second largest economy, has reduced to 7.5% instead of 8% growth target, while the Brazilian gross domestic product slowed sharply to 2.7% in 2011 against 7.5% in 2010.
"These economies are still affected by the weakness of world trade. For now, the export growth slows in the emerging world forever," notes Maarten-Jan Bakkum, strategist at ING IM.
"Another problem, especially for Asian growth, is the probability of a weaker euro," she adds, while Europe remains the largest trading partner in Asia.
At Carmignac, it tempers these fears, stressing that "the economic fundamentals are much stronger than in Europe" now in recession.
"The visibility of an emerging growth, more modest than recent years, but strong and durable seems satisfactory," said Didier Saint-Georges, an economist for the management company.
Another grain of sand could scare off investors: oil prices - which have recently soared in the wake of tensions between Tehran and Israel - could boost inflationary pressures especially in the medium term.
2011 was an anus horribilis for these financial markets. The index measuring their stock performance (MSCI Emerging Markets) tumbled more than 15% and the BRICS (Brazil, Russia, China and India) have unscrewed more than 20%.
But the tide has clearly turned. Since the beginning of the year, the Moscow stock market was soaring 25.5%, that of Sao Paulo by 18%, while Shanghai has taken 11%.
Traumatized by the debt crisis in Europe and fears about global growth, investors have withdrawn $ 45 billion of funds invested in emerging markets in 2011, according to data collected by the Swiss bank Pictet. In less than two and a half months, they have already replaced 25.
First reason for this revival, ample liquidity through policies very flexible central bank America and Europe.
Overseas, the U.S. Federal Reserve (Fed) has ensured that it would keep its key rate to a record low until at least late 2014. The European Central Bank (ECB) has, for its part, in two refinancing operations three years, to inject more than 1,000 billion euros in the financial system of the euro area.
"These markets also benefit from lower inflation risks," notes François Théret, a specialist emerging markets at Natixis AM.
India is well managed, leading between March 2010 and October 2011 a very active policy of monetary tightening to curb its runaway inflation. It has reached in February its slowest pace in over two years (6.5% against nearly 10% a few months earlier).
For Frédéric Rollin at Pictet, "systemic risk on a bankruptcy or an explosion in the euro area have all but disappeared, leading to a real revival of investor appetite for emerging market assets still considered risky."
But the slowdown in economic growth in emerging countries could, if confirmed over time, cool appetites.
China second largest economy, has reduced to 7.5% instead of 8% growth target, while the Brazilian gross domestic product slowed sharply to 2.7% in 2011 against 7.5% in 2010.
"These economies are still affected by the weakness of world trade. For now, the export growth slows in the emerging world forever," notes Maarten-Jan Bakkum, strategist at ING IM.
"Another problem, especially for Asian growth, is the probability of a weaker euro," she adds, while Europe remains the largest trading partner in Asia.
At Carmignac, it tempers these fears, stressing that "the economic fundamentals are much stronger than in Europe" now in recession.
"The visibility of an emerging growth, more modest than recent years, but strong and durable seems satisfactory," said Didier Saint-Georges, an economist for the management company.
Another grain of sand could scare off investors: oil prices - which have recently soared in the wake of tensions between Tehran and Israel - could boost inflationary pressures especially in the medium term.
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