Emerging Markets Are Victims Of Their Own Success As Inflation Cools The Hot Streak

Monday, February 28, 2011 07:57
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Emerging Markets Are Victims Of Their Own Success As Inflation Cools The Hot Streak

Tags: emerging markets | world economy

Emerging-market stocks have consistently outperformed U.S. domestic equities for a decade, but this year that trend has so far seen a sharp reversal.

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In the first few weeks of 2011, emerging-market funds have fallen an average 6% while domestic funds have gained 5%. That’s largely because growth in emerging markets has led to inflation, a very real threat to the fragile economies of the emerging-market nations.


As developing countries begin raising interest rates to combat inflation, the sudden reversal of fortune highlights the growing complexity and risks of investing in emerging markets, according to this New York Times analysis.
 

Comments (1)

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vguettlein
... which is why we diversify.
vguettlein , February 28, 2011

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