More on the Turmoils in Emerging Markets

money.jpgThe Guardian also pitches in on the recent wobbles in emerming markets (see post below); the US slowdown is important but also contry specific factors are doing their part to rock the boat.

(bold parts are my emphasis) 

'A week of coups, scandal and political instability took their toll of the world's emerging markets yesterday as fears of a looming US-led economic slowdown triggered a bout of selling by jittery investors.

Bonds, shares and currencies in the smaller, developing economies of eastern Europe, Asia, Africa and Latin America suffered from the flight out of risky but high yielding assets and into safer havens. With markets already tense following this week's coup in Thailand and the admission by Hungary's socialist government that it had lied about the health of the economy to win power, investors were dealt a fresh double blow by Thursday's weak economic news in the US and the collapse of Poland's coalition government.'


'Debt spreads - the difference between the interest rate on bonds in emerging markets and those of US Treasury bonds - widened as investors demanded a higher price for holding riskier assets. In recent months, the gap has been narrow in anticipation that the fastest four-year spell of growth since the early 1970s would continue to benefit the world's poorer regions. Bonds in the developed world and the traditional haven of gold were the main beneficiaries of the flight to quality, with UK gilts staging one of their biggest rallies this year.'