Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: Mannie who wrote (74736)	6/1/2011 3:52:25 PM
From: elmatador	1 Recommendation Read Replies (1) \| Respond to of 217879

Emerging markets to see investment rise By Alan Beattie in Washington Published: June 1 2011 18:05 \| Last updated: June 1 2011 18:05 Capital inflows to emerging market countries will surge yet higher this year as money flowing into China and Brazil more than offsets investors pulling money out of Egypt, according to a group of leading financial institutions. The Institute of International Finance, a global association of banks and finance houses, on Wednesday said it had revised up its regular estimate of net private capital flows by $81bn for both last year and this, to a total of $990bn in 2010 and $1,041bn in 2011. Inflows to middle income countries had recovered sharply along with the global economy, though the IIF said the rise was likely to slow in coming years. Emerging market debt gives sign of hope - May-31Jeremy Lawson, the IIF’s deputy director of macro-economic analysis, said: “We expect interest rate differentials with the mature economies will widen in the near term as the emerging markets combat overheating, but then stabilise next year as policy normalisation in the mature economies gathers pace”. The report said that capital inflows to the Middle East and north Africa showed a sharp contrast between the continued robust investment in oil exporting economies, thanks to the high price of crude, and countries such as Egypt where political instability had caused money to flee the country. The institute revised down this year’s estimates of net capital inflow to the region by $33.4bn to a total of $55.7bn, lower than last year, with Egypt alone having suffered an outflow of about $18bn so far in 2011. Emerging market countries have complained that loose monetary policy in the US has driven capital into their economies, threatening to fuel credit booms. Several experimented with capital controls to prevent destabilising upward pressure on exchange rates. But those complaints have diminished as the US Federal Reserve has signalled an end to quantitative easing. The IIF, whose members tend to benefit from the free flow of capital across borders, said that direct controls were a solution to the wrong problem. Philip Suttle, chief economist at the IIF, said: “In most cases, strong capital flows and rising exchange rates are simply the counterparts of strong fundamentals and a necessary part of macroeconomic adjustment.” Mr Suttle said that the ratio of foreign lending to credit growth in emerging markets had fallen since the financial crisis, suggesting that international capital flows were not driving the credit booms that many economies have experienced. Countries should tighten fiscal policy and raise interest rates if necessary rather than resorting to capital controls. “The emphasis should be on tools that target aggregate macroeconomic imbalances and not just foreign capital,” Mr Suttle said. Copyright The Financial Times Limited 2011. You may share using our article tools. Please don't cut articles from FT.com and redistribute by email or post to the web.