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From Precy Dumlao, Opalesque Asia:

Many expect that because of the lack of opportunity for growth in developed markets, investors will be forced to shift their attention towards emerging markets and increase their exposures in these economies. However, according to a study by Florida-based asset manager Consilium Investment Management many institutional investors are significantly underweight and their typical allocations into emerging market is only between seven and nine percent. The growth and performance requirements of many of these investors (pensions and endowments especially) may require them to radically alter this view of emerging markets.

"These allocations will need to increase in the coming years as the emerging markets begin to drive the global economy. Investors need to show patience in the short term as the current events in Europe and US unfold," Consilium said in its monthly report to investors.

At the same time, Consilium is predicting that the headwinds in emerging markets are likely to continue in the short term; however, the firm expects that in the medium-to longer-term, investors will be forced to increase their emerging market exposures.

A study by Bank of America Merrill Lynch released last week showed that global macro hedge funds investments in emerging markets is "approaching a crowded long" position on concerns over the U.S. debt ceiling and the European sovereign debt issues......................

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