Poll: Investor Confidence Over Emerging Markets Plunges
The BRIC markets are seen as some of the worst investment choices right now according to the results a poll conducted by Bloomberg, the news agency reports. The country chosen as the worst place to invest money right now was India, followed by Brazil, Russia, and China. This represents a turnaround for these countries, who, a short time ago, were seen as some of the best opportunities by investors as cash flocked in to the emerging powerhouses.
What has changed since then is the introduction of fears about the American Federal Reserve tapering their policy of quantitative easing, which is set to be discussed at a meeting of the Fed next week. When quantitative easing is in full force, dollars are cheap, leading investors to put money into emerging markets because they have access to so much inexpensive capital.
However, expectations over rising interest rates and the end of quantitative easing have caused investors to pull out, which, in turn, causes currencies to sink in the countries when cash is withdrawn. Brazil, India, and Turkey have seen both dramatic decreases in the value of their currencies and dramatic increases in the interest rates of their bonds.