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Tuesday, 25 January 2011

EM capital flows: $1 trillion and beyond? | beyondbrics | News and views on emerging markets from the Financial Times – FT.com

It’s no secret that as the developed world has struggled through the financial crisis, emerging markets have become ever more attractive to investors keen on the prospect of high returns, positive growth and acceptable perceived risks.

A new forecast from the Institute of International Financepaints a clear picture of this trend, estimating that private capital flows to emerging economies surged to $910bn in 2010 from about $600bn in 2009. What’s more, the IIF predicts that number to grow to $960bn this year – and to hit a whopping $1,000bn in 2012.

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The regional breakdown is as you might expect, with Asia pulling in more than 40 per cent of net private flows with a record $446bn last year, dominated by China and India. Latin America comes in second with $220bn in 2010, approaching 2007′s record, with particular strength in corporate bonds.