CORRECTED-INVESTMENT FOCUS-Fed up with waiting, U.S. hike needed to clear emerging markets air

viernes 7 de agosto de 2015 11:39 GYT

(Corrects name of fund manager's company in para 13)

By Sujata Rao

LONDON Aug 7 (Reuters) - Emerging markets have spent more than two years in a slow-motion crisis with the threat of a U.S. interest rate rise hanging over them. The Federal Reserve's first hike in nearly a decade, when it finally comes, might actually clear the air.

An eventual rise in borrowing costs has been anticipated since May 2013 when then-chairman Ben Bernanke sparked a global emerging market sell-off by speculating about winding down, or tapering, of the Fed's money-printing programme

As higher U.S. interest rates raise the global cost of capital and depress the price of their commodity exports, Fed tightening has historically spelt trouble for emerging economies that still overwhelmingly rely on overseas investment.

From the 'taper tantrum' onwards, U.S. tightening -- though glacially slow -- has prevented a durable investor return to parts of the world deemed most at risk.

But increasingly, policymakers as well as investors are hoping the Fed will get a move on.

Years of easy money pushed investors into emerging markets. That led currencies to become overvalued, widened balance of payments deficits, hurt productivity and fuelled a surge in household and company debt -- weaknesses that were highlighted by the 2013 plunge.

With a Fed hike now seen as early as next month, there's at least some hope that a healing process can begin, including via weaker currencies, said Kamakshya Trivedi, managing director for EM research at Goldman Sachs.   Continuación...