Beware growing threat from emerging-market shocks, says IMF

Tokyo

STOCK investors, along with policy-makers, need to pay more attention to what is going on in the world's leading emerging economies - China's especially - as evidence of financial "spillovers" from emerging to advanced markets continues to mount, the International Monetary Fund (IMF) has warned.

In the latest edition of its Global Financial Stability report published on Monday, the Washington-based institution said: "Shocks to economic fundamentals, such as news about China's growth, are increasingly driving equity returns in both emerging market and advanced economies.

"It is likely that China's spillovers to global financial markets will increase considerably from now on."

China's wrenching stock-market crash at the beginning of this year was the most dramatic example to date of how emerging-market incidents can trigger shocks across advanced and emerging markets, the…