Portfolio investment in emerging market economies: Trends, dimensions and issues

The aim of this paper is to provide an in-depth analysis of current trends in securitised financial flows, particularly private portfolio equity investment, into emerging market economies. It delves into the process of stimulation of these flows and the institutional, structural and non-cyclical factors behind this. The progressively important role of institutional investors caused an increase in the quantum of portfolio investment into the emerging market economies. These flows were adversely affected by the crises that struck during the latter half of 1997 and 1998. The subject matter of this paper also includes two of the most important policy issues, namely, the hot-money and cold-money issue, and the volatility issue.