Filed under: China, Federal Reserve, Currency
Amid the political and social uprisings in the Middle East, and union protests in the U.S., a recent speech by a pivotal U.S. policy maker received little attention, but it’s one that investors should review.
In a speech before the recent G-20 meeting, U.S. Federal Reserve Chairman Ben Bernanke urged emerging market nations to address the flood of money streaming into their markets.
“Capital flows are once again posing some notable challenges for international macroeconomic and financial stability,” Bernanke said, adding that the flow of money could trigger inflation, price bubbles, and currency appreciation that will hurt these emerging economies if it isn’t checked. Further, Bernanke also rejected the thesis that the Fed’s policies were to blame, citing the emerging markets’ higher rate of return as the primary reason for the cash flows.
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Bernanke: Emerging Markets Need to Address Capital Flows originally appeared on BloggingStocks on Tue, 22 Feb 2011 18:00:00 EST. Please see our terms for use of feeds.
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For investors, the emerging markets have been a great place to find profits. No doubt, there are certainly risks, such as seen recently with the market turmoil in Egypt, but a diversified portfolio should solve these problems. Of course, it also helps to have lots of exposure to markets like China and Brazil.
Paraphrasing the great Mark Twain, if you don’t like the stance of institutional investors, just wait a while.
