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Emerging markets shield global investors amidst market crash
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New York Stock Exchange trading floor
For two days running, world leading markets of the developed economies have continued to witness slides in a manner that is giving concern to policy makers.
Amid these concerns, experts say the emerging markets stand as ready alternatives to investors as they seek fresh destinations for their investments.
From United States, to Europe, Asia, Mexico, and Brazil, it is a woeful story of markets on steady downturn with investors dumping their shares to ward off apparent global economic slow-down.
Federal Reserve Bank of US in a reaction to check the continued descent announced a cut in interest rate by 0.75 percent to 3.5 percent.
Reuters reported that “shares from Sydney to London sank for a second day on Tuesday, dragging commodity prices with them and promising a woeful start for Wall Street as investors dumped assets exposed to the risk of a global economic slowdown.”
The report noted that European stocks, which opened on early lows, were down more than one percent after Japan’s benchmark Nikkei lost 5.7 percent — the worst one-day loss since the session after the September 11, 2001 attacks on the United States. Also the MSCI’s measure for other Asian stocks tumbled more than seven percent.
Tom Hougaard, chief market strategist at City Index Markets, said: “We’re in the midst of very bearish sentiment. There’s a lot of fear in this street and worldwide. Everyone is so keen to get rid of their stocks now, which of course is a good buying opportunity.”
The report also quoted Dominique Strauss-Kahn, IMF managing director, on Monday as saying that all developed countries were suffering from the U.S. slowdown entrenched fears that global growth was hitting a wall.
Adding to the gloom, billionaire investor, George Soros, said the world was facing the worst financial crisis since World War Two and the United States was threatened with recession.
But global market watchers say what appears to be nightmares to the advanced economies are working well for the developing economies.
Fred Daniel, vice president, Ed Mark Capital, in an email said the emerging markets seem to be very safe alternatives for global investors. His opinion is that many of them show a certain level of disconnect from the advanced markets such that any slump there does not at the same instant affect the smaller markets.
In this case he said the emerging markets on the other hand provide a shield for the global investors.
Ibrahim Momoh, a senior official at the Nigerian Stock Exchange (NSE) said the Nigerian market is well shielded away from any global market crash. According to him, “our market does not have such hot funds that are tied to the advanced markets such that any development there will hit our market.”
Gil Mcoy of UBA Global Markets, speaking on Money Show, a television programme aired on AIT recently said most of the investments in the FGN bond are held by foreign investors. This confirms the assertion that the emerging markets one of which is Nigeria, will offer safe haven for the global investors.
Investors in Nigeria who understand the implications of such development say there are reasons why investors should be worried about their money in stocks even in Nigeria.
Akamobi ECM, managing director and chief executive, Star Insurance Brokers Limited, said there is cause for concern because the American economy has both direct and indirect effecst on global economy. According to him, most Nigerian quoted companies have one foreign investor or the other who are very sensitive to global economy especially American.
Boniface Okezie, president, Progressive Shareholders Association of Nigeria, is of the opinion that even though America does not have direct control over other economies, major transactions in the world are undertaken with the American Dollars as the universally accepted medium of exchange.
He said that even though the possible slide affected other markets and other economies, such scenario should not bother an individual as it would have global implication.
“If there is a drastic reduction in share price of stocks which is general, it would amount to what happens when banks want to harmonise their shares after mergers. The slide that has a general effect on every investor should not be a peculiar problem that should bother an individual,” he said.
Another investor, Ben O Omanukwue, managing director and chief executive, KRABO Nigeria plc said that even without speculation on possible slide on American economy, Nigerian stocks on their own at times display some esoteric movements that confuse investorse
From United States, to Europe, Asia, Mexico, and Brazil, it is a woeful story of markets on steady downturn with investors dumping their shares to ward off apparent global economic slow-down.
Federal Reserve Bank of US in a reaction to check the continued descent announced a cut in interest rate by 0.75 percent to 3.5 percent.
Reuters reported that “shares from Sydney to London sank for a second day on Tuesday, dragging commodity prices with them and promising a woeful start for Wall Street as investors dumped assets exposed to the risk of a global economic slowdown.”
The report noted that European stocks, which opened on early lows, were down more than one percent after Japan’s benchmark Nikkei lost 5.7 percent — the worst one-day loss since the session after the September 11, 2001 attacks on the United States. Also the MSCI’s measure for other Asian stocks tumbled more than seven percent.
Tom Hougaard, chief market strategist at City Index Markets, said: “We’re in the midst of very bearish sentiment. There’s a lot of fear in this street and worldwide. Everyone is so keen to get rid of their stocks now, which of course is a good buying opportunity.”
The report also quoted Dominique Strauss-Kahn, IMF managing director, on Monday as saying that all developed countries were suffering from the U.S. slowdown entrenched fears that global growth was hitting a wall.
Adding to the gloom, billionaire investor, George Soros, said the world was facing the worst financial crisis since World War Two and the United States was threatened with recession.
But global market watchers say what appears to be nightmares to the advanced economies are working well for the developing economies.
Fred Daniel, vice president, Ed Mark Capital, in an email said the emerging markets seem to be very safe alternatives for global investors. His opinion is that many of them show a certain level of disconnect from the advanced markets such that any slump there does not at the same instant affect the smaller markets.
In this case he said the emerging markets on the other hand provide a shield for the global investors.
Ibrahim Momoh, a senior official at the Nigerian Stock Exchange (NSE) said the Nigerian market is well shielded away from any global market crash. According to him, “our market does not have such hot funds that are tied to the advanced markets such that any development there will hit our market.”
Gil Mcoy of UBA Global Markets, speaking on Money Show, a television programme aired on AIT recently said most of the investments in the FGN bond are held by foreign investors. This confirms the assertion that the emerging markets one of which is Nigeria, will offer safe haven for the global investors.
Investors in Nigeria who understand the implications of such development say there are reasons why investors should be worried about their money in stocks even in Nigeria.
Akamobi ECM, managing director and chief executive, Star Insurance Brokers Limited, said there is cause for concern because the American economy has both direct and indirect effecst on global economy. According to him, most Nigerian quoted companies have one foreign investor or the other who are very sensitive to global economy especially American.
Boniface Okezie, president, Progressive Shareholders Association of Nigeria, is of the opinion that even though America does not have direct control over other economies, major transactions in the world are undertaken with the American Dollars as the universally accepted medium of exchange.
He said that even though the possible slide affected other markets and other economies, such scenario should not bother an individual as it would have global implication.
“If there is a drastic reduction in share price of stocks which is general, it would amount to what happens when banks want to harmonise their shares after mergers. The slide that has a general effect on every investor should not be a peculiar problem that should bother an individual,” he said.
Another investor, Ben O Omanukwue, managing director and chief executive, KRABO Nigeria plc said that even without speculation on possible slide on American economy, Nigerian stocks on their own at times display some esoteric movements that confuse investorse
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