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From Sagar Chakraverty, Opalesque Asia:

This week’s “Occasional View” article from Ashmore, a London-based investment management firm, draws a comparison between the investment patterns of the emerging markets and the advanced economies.

The asymmetrical investment pattern between these two worlds reveals a major difference of opinion about the international economy, where emerging markets exhibit higher confidence about raising their investment level in other emerging markets.

Cross-border portfolio investments The Coordinated Portfolio Investment Survey (CPIS) of the IMF points out that emerging markets have a higher proportion of their cross-border portfolio investments to other emerging markets than developed economies . These cross-border portfolios of assets jumped three times between 2001 and 2008 for emerging markets while it is two times for advanced economies, thereby marking significant growth in portfolio allocation pattern.

Investments are driven predominantly by equities but allocation to debt securities has also shown a continued rise.

If this trend continues, it could help to integrate emerging markets and bring down the relative portfolio prices in their favour.

In contrast to that, advanced economies have persistently kept a slow growth rate of portfolio investments in emerging markets while maintaining a substantially higher proportion of their cross-border portfolio investments in other advanced economies.

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