The present crisis in Latin American financial markets has not
received the kind of end-of-the-world-is-nigh coverage accorded to
previous emerging-market crises.
But that doesn't mean investors aren't showing signs of panicking;
quite the opposite. Across the hemisphere, fund redemptions are
running at record rates, as individuals sell out at market lows.
Latin America's mutual fund industry has been dealt a severe blow
this year: total funds under management plunged to $163.2 billion
from $202.1 billion in just the three months from the end of March
to the end of June. And while most of this was a result of falling
asset prices, a lot of it was because scared investors pulled their
money out: total redemptions reached $10.9 billion in June alone.
The vast majority of redemptions were from Brazilians, worried
that if a left-wing president is elected in October, he might
freeze access to their assets, Argentina-style....
