(MENAFN) Emerging markets risk shattering into BITS. Investors in these markets became more distinctive about where they put their money, avoiding countries such as Brazil, India, Indonesia, Turkey and South Africa, The Daily Star Reported.
Behind the discrimination is a new-found focus on current-account deficits and structural weaknesses exposed by the likelihood of less stimulus from the Federal Reserve and cooling demand in China, according to economists from HSBC Holdings Plc, JPMorgan Chase & Co. and International Strategy & Investment Group LLC.
That's a break from the past four years when emerging markets mainly moved in tandem, seen as either a blanket buy or sell with little regard to their individual circumstances. Such a mindset was epitomized by the popularity of the BRIC acronym coined for Brazil, Russia, India and China to reflect their potential as future economic powerhouses.
Investors are taking a closer look as the Washington-based Institute of International Finance predicts that private capital flows into emerging markets will fall USD153 billion to USD1.1 trillion in 2013 and slide another USD33 billion next year.
The market fallout after the Fed's tapering signal in May served as a "stress test" for these countries, which now know "where their weaknesses lie," deputy managing director at the IMF in Washington, said in an interview
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