BASEL (AFX) - The Bank for International Settlements said investors are flocking to emerging markets, but are wary of more established financial centres.
'Asset prices in emerging markets rallied to record highs early in the new year,' the BIS said in its quarterly review.
'Foreign investors snapped up emerging market bonds and equities, pushing indicators of valuations towards and in some cases beyond the upper end of their historical range,' it said.
The BIS attributed this to the improvement in many countries's economic fundamentals and to investors' heightened appetite for risk.
By contrast, it said: 'In the major markets, investors were less exuberant. They seemed uncomfortable with current valuations in equity and corporate bond markets but at the same time uncertain in which direction to take a position.'
The BIS said that in the US, interest rates, oil prices and corporate earnings weighed on equity prices.
It noted that yields in government bond and swap markets rose 'despite mixed news on the economy as traders expected monetary policy to tighten further in the US and Europe.'
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