Worst is almost over for emerging markets

11 September 2013

The worst is over for Asian emerging markets after investors pulled billions of dollars last month on concern the US Federal Reserve will start cutting back bond purchases, according to Nomura Holdings Inc. "We're through the worst of the crisis but it doesn't mean individual countries won't continue to suffer significant challenges," Steve Ashley, London-based head of global markets at Nomura, said in an interview. "We remain relatively positive on the longer-term performance of risk assets in Asian emerging markets."

The outlook for Asian emerging markets remains "very positive" over the next five to 10 years as the amount of investments by funds in these countries will likely have to catch up with the growing size of their economies, Mr Ashley said in Singapore on Aug 30.

The market value of shares traded in China accounts for 37 per cent of gross domestic product, compared with 107 per cent for stocks in the United States, according to Bloomberg data. The proportion is 45 per cent for Indonesia and 54 per cent for India, the data shows.

The International Monetary Fund in July predicted the economies of developing Asia will expand 6.9 per cent this year, compared with 1.7 per cent for the US. The MSCI Asia-Pacific Excluding Japan Index dropped as much as 14 per cent after Fed chairman Ben Bernanke said on May 22 the US central bank may start tapering US$85 billion in monthly bond purchases if the world's biggest economy improves. The gauge climbed 0.6 per cent as at 11.33am in Singapore, rising for a fourth day.

Source: Business Times

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