Emerging Markets And Ipos Hooking Up On The Global Horizon

Abstract

An analysis of the difficult past year shows that emerging markets have actually held their value more successfully than developed markets, with declines of considerably smaller magnitude than those seen in the U.S., Europe and developed Asia. The focus of this paper is on the emerging markets of Latin America and Asia where funds are up more than 50 percent this year after returning nearly 40 percent in 2004 and more than 60 percent in the previous year.  After years of doldrums triggered by Brazil's devaluation of the real and the subsequent Argentine crisis, capital markets are regaining strength. In Chile and Brazil, for instance, mergers and acquisitions are on the rise and stock offerings are back in fashion. Even retail investors have joined institutional investors in participating in Initial Public Offerings (IPOs), such as the one from Chile's second-largest department store, Bipley. Pension funds also have been important to financing, particularly for Chile's biggest companies, though the private pension funds are near their legal limit for equity investments.  The first section of the paper focuses on a general definition and characteristics of the global emerging markets. The second section of the paper concentrates on the Latin American Equity and Bond market with special attention towards the performance of the markets over the past year. The final section looks at the recent developments of the region, risks of the region and concludes with suggested policies for the future.