Financial Lobby Group Warns on Emerging Markets

(ZURICH) — A leading lobby group for the world’s financial institutions is warning investors not to get caught short in emerging markets if rich-country central banks end their easy and cheap money policy of the past few years. The Institute of International Finance said Tuesday that the withdrawal of massive stimulus by the U.S. Federal Reserve and other central banks could lead to a “boom-bust cycle” in emerging markets if investors are unprepared. (MORE: The Federal Reserve’s Rule-Making Secrecy) “The risk of market participants being unprepared for a reversal of rates is real and needs to be seriously considered to avoid disruption,” the IIF said. Low interest rates around the world over the past five years have boosted investments into faster-growing emerging countries — where money can earn a better return. The IIF sounded its warning...