The fissures that have been quietly spreading through some of Asia's economies over recent months are now shaping up as yawning cracks. Emerging markets from Thailand to India plunged into the red amid a heavy sell-off, as investors reassessed the implications of another shift in the global economy.
India's currency, the rupee, has fallen to record lows against the US dollar. Currencies from Brazil and South Africa were also pummelled as investors fled back into US and European markets.
As the US Federal Reserve mulls winding back its super loose monetary policy, Asia is now faced with the prospect that the tap of cheap debt will be turned off.
The realization of an end to the lavish spending that has been driving growth through the region has started to upend markets. In doing so, it has stoked memories of the bushfire that was the 1997 Asian financial crisis.
More worrying, some argue that if growth through Asia stalls, this could have serious implications for Australia, particularly as banks and miners have pushed deeper into the region over the past decade.
The Fed is tipped to begin winding back its $US85 billion-a-month stimulus program as early as next month, and currency flows are being turned upside down, moving out of emerging markets such as Brazil, India, Indonesia and South Africa and back to old world economies of the northern hemisphere.
n contrast to the events of Asia, the severe slowdown in Europe has improved external balances and led to a large current account surplus for the euro.
Flows into European stocks hit a two-month high of $US755 million last week, figures from funds tracker Lipper show.
It was the largest inflow since mid-June, when a record $US1.17 billion was reached.
In the year to date, France's CAC 40 has risen 11.5 per cent, Germany's DAX 10 per cent, and Britain's FTSE 100 9.3 per cent.
In comparison, Hong Kong's Hang Seng has fallen 2.7 per cent, India's Sensex 5.7 per cent and Jakarta's index 2.2 per cent. Australia's S&P/ASX200 is up 10.4 per cent.
Read more: Economic storm clouds shift from Europe to Asia
India's currency, the rupee, has fallen to record lows against the US dollar. Currencies from Brazil and South Africa were also pummelled as investors fled back into US and European markets.
As the US Federal Reserve mulls winding back its super loose monetary policy, Asia is now faced with the prospect that the tap of cheap debt will be turned off.
The realization of an end to the lavish spending that has been driving growth through the region has started to upend markets. In doing so, it has stoked memories of the bushfire that was the 1997 Asian financial crisis.
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More worrying, some argue that if growth through Asia stalls, this could have serious implications for Australia, particularly as banks and miners have pushed deeper into the region over the past decade.
The Fed is tipped to begin winding back its $US85 billion-a-month stimulus program as early as next month, and currency flows are being turned upside down, moving out of emerging markets such as Brazil, India, Indonesia and South Africa and back to old world economies of the northern hemisphere.
n contrast to the events of Asia, the severe slowdown in Europe has improved external balances and led to a large current account surplus for the euro.
Flows into European stocks hit a two-month high of $US755 million last week, figures from funds tracker Lipper show.
It was the largest inflow since mid-June, when a record $US1.17 billion was reached.
In the year to date, France's CAC 40 has risen 11.5 per cent, Germany's DAX 10 per cent, and Britain's FTSE 100 9.3 per cent.
In comparison, Hong Kong's Hang Seng has fallen 2.7 per cent, India's Sensex 5.7 per cent and Jakarta's index 2.2 per cent. Australia's S&P/ASX200 is up 10.4 per cent.
Read more: Economic storm clouds shift from Europe to Asia
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