The demand for assets in developing countries among investors has grown again.
Only in the last two months, investors have invested in the debt markets of developing countries about $ 10 billion. And, experts say, this is a significant turn of events, since, according to research Bank of America (BAC) Merrill Lynch , in the period between 2013 and 2015, th years of the investment flow from the debt markets was $ 103 billion.
Inflows to emerging markets has accelerated in recent years, and more specifically in the last few weeks. Since the beginning of this year, the index of emerging markets MSCI Emerging Markets Index increased by 5.5% - a significantly better rate compared to the US and European indices.
Since the beginning of the year the stock markets in Brazil, Argentina and Russia increased by 10% or more.The markets in South Africa and Mexico are also higher.
Interest in emerging markets is fueled by several key factors, experts say. Oddly enough, many constraints in the past year were challenging this.
1. Commodity prices, which are the engine of growth in developing economies rose in February after a sharp drop in the past two years.
2. The US Federal Reserve has revised its forecast increase in the federal funds rate this year and is now expected to raise interest rates twice. Higher rates tend to attract more investment. Thus, investors are looking for higher returns on riskier markets.
3. A strong US dollar is losing momentum, while the currencies of developing countries continue to recover.
The influx of foreign investment in global emerging markets accelerated significantly in the last week. Argentina government bonds issued in the international capital market for the first time since 2001, totaling $ 15 billion, which, according to Dealogic, is the maximum amount in the history of developing countries.
Despite this, experts warn that these markets still pose risks. The economic situation in Russia and Brazil is still not stable. Prices of some commodities, such as oil, remain at low levels, although higher grades achieved in January. A slowdown in China remains a major problem. Here are the reasons why investors remain cautious about the global economic outlook.