Emerging Market Liquidity

At least thus far, investors worried over the prospects of a global credit squeeze have afforded emerging market funds a bit more leeway than their developed-market counterparts. Things may be getting a bit frothy, says FT's Alphaville, citing data from Standard & Poor's new "Liquidity Vulnerability Index." The measure rates Latvia, Iceland, and Bulgaria as the emerging market countries most susceptible to a broad evaporation of liquidity. Most "sheltered" is Russia, followed by Egypt, the Ukraine, and the Czech Republic.

Should an emerging debt-market shakeout come along, the Economist isolates Turkey as particularly vulnerable, given its large current account deficit, but also notes that today's emerging markets don't much resemble the markets that got whacked during the financial crises of the '90s, given that many have restructured their borrowing and built up large foreign currency reserves.