Emerging markets rout stirs unease about capital curbs

lunes 28 de septiembre de 2015 11:34 GYT

By Sujata Rao

LONDON, Sept 28 (Reuters) - Moves by Nigeria and China to clamp down on currency and equity markets have raised fears other countries may also seek to curb capital movement as a way to stem the exodus of money from emerging markets.

Some governments are already restricting citizens' ability to move cash freely or tightening existing measures and some foreign investors worry they may be next in line.

As 2015 outflows from emerging stock and bond funds near $100 billion and currencies from Malaysia to Brazil plumb multi-year lows, memories are stirring of past controls that block unlucky investors' exits.

At stake is the $7 trillion that the Institute of International Finance reckons has flowed into emerging markets since 2005, via direct investments, mergers and acquisitions, and stock and bond purchases. Some of those with EM exposure may considering moving before regulators do.

"Malaysia, Brazil, Indonesia all have a recent history of intervening and imposing capital controls ... this is very much contingent on how much more outflows there are to come, and how much more depreciation there is to come," said Aidan Yao, senior emerging Asia economist, Axa Investment Managers Asia.

Capital controls are often first levied on local bank deposits or exporting firms. But freezing exchange rates or interbank trading can leave foreign investors struggling to liquidate assets or withdraw cash from banks.

Having resolved not to devalue its naira, Nigeria has clamped down on firms' dollar purchases and squeezed interbank currency trading to the maximum -- market players report three to five deals a day instead of 80-100 previously.

China has increased checks on firms' currency buying and passed regulations to curb "malicious" trade in stock futures after months of equity turmoil and capital outflows.   Continuación...