Emerging Markets Dive on Stimulus Fears

Emerging Markets Dive on Stimulus Fears (CNNMoney)

Investors were fleeing from risk this morning, as indices were down more than 2 percent in Tokyo (Nikkei 225 -2.51 percent) Hong Kong (Hang Seng: -2.11 percent) and Mumbai (Sensex 30 -2.02 percent). This sluggish performance spread into European markets this morning, as well, with England’s FTSE 100 off 1.53 percent, while France’s CAC 40 and Germany’s DAX were losing around 0.45 percent each. The flight is primarily based on fears that the U.S. Federal Reserve, Bank of England and Bank of Japan will all be weaning the world off of their free-money stimulus… and soon. So where does that leave you as an investor? Waiting, until Wednesday, that is. On Jan 29, the Fed will announce its latest policy decision. And if you believe that the Fed will reduce stimulus again from this month’s $75 billion figure, then you also may want to start moving your funds from any emerging-market plays you have. As many feel their economies will be hit hardest once the easy-money policies are tapered.