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« It Takes Two to Tangle | Main | The Declining Dollar and the Battle Between Europeans and Americans »

January 31, 2008



Hopefully, as private equity activity comes to a standstill due to uncertainties in the credit market, SWFs will be able to fill in the investment void that has resulted. On the flip side, it's worth asking to what extent are the economies of the larger emerging markets correlated to that of the U.S. and other developed countries. There is a lot of talk about "de-coupling," and with a looming U.S. recession, I wonder just how much will the "world's growth engines" be affected.

Haseeb Chowdhry

The fact is that emerging markets are becoming increasingly correlated with US markets. However, SWFs have demonstrated considerable growth with reinvestments in diversified asset classes. I don't think it's an immediate problem because SWFs have a lot of capital, but I think they have different investment strategies than private equity firms. It's definitely something to think about.

Shreevats Jaipuria

I think each emerging economy is inherently different in its dependence on the US. With respect to the Indian economy, which is driven by domestic demand, it is less dependent on exports. However, I think the equity markets are still largely dependent on inflow of foreign capital.

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