What are emerging markets telling us?

Are You Panicking Over the Emerging-Markets Slide?

"Fears Over Interest Rates Send Emerging Markets Tumbling"
"Dealing on Indian Exchange Suspended"
"Worst Emerging Markets Run Since Russian Default"

"These alarming reports, which appeared in the May 23 editions of The Wall Street Journal and Financial Times, indicate the depth of the slide in emerging markets around the world. And while those items referred to a single day's carnage, the decline has been going on for weeks now."

This article got me thinking that the sharp falls in emerging and secondary markets in the past week or so are probably due to reduced levels of liquidity and hot money closing out secondary positions to maintain their core holdings. Hedge funds have long been blamed for causing stock market volatility by quickly moving around money chasing gains or fleeing falls. As volatility continues, one would expect most fund managers to continue doing so, exacerbating market moves. The secondary markets are usually the ones to react first and give clues as to the direction of the 'tide' of money and mood of investors or market makers. Perhaps they are sending ominous signals.

Market Crash
http://mktcrash.blogspot.com/