PARIS (Thomson Financial) - The Bank for International Settlements said it appears increasingly likely that recent tensions in credit markets will hit economic growth, even in emerging markets which had previously been regarded as immune to the fallout from the US subprime mortgage crisis.
'Weak US macroeconomic data releases, combined with further large-scale bank writedowns and concerns about financial guarantors, increased the perceived chances of global financial stress spilling over into the real economy,' the BIS said in its quarterly review of financial markets.
'While price reactions to credit market stress had previously been more pronounced among industrialised economies, concerns over a more widespread growth slowdown clearly began to weigh on many emerging financial markets over the period,' it said.
The BIS said equities in Asia and emerging European economies have been hit in recent months as investors reassessed their resilience to tensions in industrialised country credit markets.
'Investors appeared to challenge previous assumptions regarding the remoteness of Asian and emerging European equity markets from problems facing the United States, suggesting a change in investor emphasis from direct to indirect sources of risk to growth and earnings,' it said. steve.whitehouse@thomson.com sw/slj COPYRIGHT Copyright Thomson Financial News Limited 2007. All rights reserved. The copying, republication or redistribution of Thomson Financial News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Financial News.
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