Latin America fears American rate rise

Since the beginning of the year the stockmarkets of emerging markets have suffered much more than those of developed countries.

Fernando Luque 20 May, 2004 | 11:39AM
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As of May 13th the MSCI Emerging Markets index had lost 5.8% (all index figures are in dollar terms) so far this year compared with a decline of 2.6% for the MSCI World index.

The current circumstances of high uncertainty in the political and economic arena do not favour investments in the emerging countries. Investors in general, and particularly those positioned in the emerging markets, are extremely worried about the impact of an interest rate rise in America. Higher rates in America are likely to draw capital away from riskier emerging markets.

That is probably why Latin America, which is viewed as riskier than Asia or Eastern Europe, has been more affected than any other emerging region. The volatility data for the different Morningstar emerging markets categories h

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Fernando Luque

Fernando Luque  is Senior Financial Editor at Morningstar Spain