Sentiment and Sensibility in Emerging Markets

The next several months are likely to be marked by volatility in capital flows to emerging markets. But for investors who distinguish between the prospects of individual countries and sectors, emerging markets will remain attractive long-term investment opportunities.

BERKELEY – Emerging market economies have experienced hard times in recent months. Net capital flows to these economies declined by an estimated $122 billion, or about 9.6% year on year, in 2013, and fell sharply again during the first two months of this year. What is driving the decline, and how long will it continue?

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