Estimated Net Private Capital Flows into Emerging Markets

I read a news article in Reuters.com - this gives us a picture of the amount of money flowing into emerging markets from developed nations. Here are some highlights from the news article -

"The Institute of International Finance estimated that net private capital flows to emerging markets would rise sharply to $825 billion this year from $581 billion last year. Capital flows into these economies will remain strong next year, amounting to about $833 billion".

Now that's almost a 42% increase from last year and these numbers don't include sovereign investments. I still don't see this huge capital inflow into these emerging markets as a big problem but definitely countries that are too much export-dependent need to be careful on this. I hope the central-bankers in these countries are watchful of this huge inflow of money especially I hope they pay attention to this line from the news article -

"The IIF said the biggest share of private capital flows is likely to come from portfolio equity investments by foreigners. This is forecast to be $186 billion in 2010, up from an average of about $62 billion a year in 2005 to 2009, and higher by $94 billion from the IIF's April estimate."

I still don't see a reason to panic or worry, but net portfolio investments into emerging markets are something that needs to watched on a regular basis, due to the volatility that they may bring.

Article Link (Source):

http://www.reuters.com/article/idUSNLL4LE6IP20101004