TOKYO -- In light of the recent global financial turmoil, nearly 80% of stock market players predict that gaps among emerging economies will start to widen, according to the QUICK Monthly Market Survey in February.
Market information provider QUICK Corp., a Nikkei group company, asks equity specialists at Japanese brokerages and institutional investors every month about their outlook for the market. In the February survey, special questions about emerging markets were included.
Asked about the future of emerging economies, whose currencies are falling, 77% of respondents predicted "gaps among them will widen," while 12% expected "the situation will settle down quickly."
Investors started to sell currencies and stocks of the so-called Fragile Five -- Brazil, Turkey, South Africa, India and Indonesia -- last year, said one fund manager responding to the survey. "Although financial markets of all emerging countries are currently under selling pressure, investors will likely take another look at nations with good fundamentals, such as the Philippines."
"Speculators failed to dump currencies of emerging countries as their central banks moved quickly (to raise interest rates)," said another fund manager, adding that the turmoil is unlikely to spread further for now.
Concerning the impact of the fall in emerging-market currencies on U.S. monetary policy, the most popular answer was "the pace of tapering of quantitative easing will not change," at 75%. "The pace of tapering will slow" followed with 23%.
"A slowdown in emerging economies has been already anticipated," said a bank official in the survey. This would mean the latest developments are not likely to affect the Federal Reserve's decisions.
Asked about the yen-dollar exchange rate by the middle of this year, 51% of the respondents answered "the yen's downtrend will not change." "The yen will move within a boxed range" followed with 44% of responses and "the yen will become stronger" with 6%
As for their projections for the domestic stock market by mid-2014, 47% answered that "the market will be mixed." The second-most common response was that "the market will maintain an upward trend," with 43%.
The survey was conducted Feb. 4-6, with slightly more than 170 officials answering.