Financial lobby group warns on emerging markets

[January 22, 2013]  ZURICH, Switzerland (AP) -- A leading lobby group for the world's financial institutions is warning investors not to get caught short in emerging markets in the event that the cheap money policy of the past few years comes to an end.

The Institute of International Finance says Tuesday that the withdrawal of massive stimulus by the U.S. Federal Reserve and other rich-country central banks could lead to a "boom-bust cycle" in emerging markets if investors are unprepared.

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 report was released ahead of the World Economic Forum in Davos, Switzerland, where some 2,500 business and political leaders are gathering to discuss economic risks ahead this year.

[Associated Press]

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