Emerging market stock rally not sustainable: IIF

Tokyo

AFTER a plunge in emerging market stock prices towards the end of last year, some of them have begun recovering on the back of rising capital inflows from advanced economies, raising the question among investors of whether the emerging market rally is sustainable.

But the Institute of International Finance (IIF) in Washington whose members include some of the world's leading banks and finance houses, says in a new report that the recent price rally is based on fluctuating risk appetite rather than improved emerging market fundamentals. "We do not see sustained improvement in the poor fundamentals in emerging market economies," the IIF said in a report whose views are largely in line with those of other leading international financial in institutions.