Financial Jitters Reach Emerging Markets


WARSAW — Emerging markets that seemed healthy, even thriving, barely a month ago are beginning to find themselves caught in the worldwide panic.


From Europe’s former Communist bloc to South America, fear and disbelief mingled with frustration that a breakdown in the United States mortgage market — one that most investors and institutions in emerging markets had avoided — was beginning to lead once again to their punishment at the indiscriminate hands of the capital markets.


Poles were jolted last month by the sudden discovery that they were not immune to the financial crisis contagion rippling across the globe. The plunging stock market here and the drastic weakening of the Polish currency proved how wrong they were.


Developers across the country have halted building projects for thousands of apartments as banks have grown stingy with lending. The boomtown energy here has been replaced by nervous eyeing of the once powerful zloty, as it retreats in value against the dollar and the euro.


Poland is still considered relatively healthy compared with Hungary and Ukraine , which have been among the hardest hit. Last month, the two reached tentative agreements with the International Monetary Fund for assistance aimed at preventing their financial systems from collapsing. Still, alarm about Hungary and Ukraine has infected Poland .


And the reverberations have extended much farther. In South Africa, the price of platinum, a major earner of foreign exchange, has plummeted, from more than $ 70 a gram in June to less than $28 now, contributing to a sharp depreciation in that country’s currency. Brazil ’s currency has fallen by more than 40 percent against the dollar since August. The Turkish lira has fallen by more than 30 percent against the dollar in recent weeks and almost 20 percent against the euro.


Fuat Karatas, 41, a dental technician in Istanbul , buys some imported materials priced in euros but cannot pass on the rising price to customers, who pay in lira, he said. “Now with the euro going crazy, I have no idea how things are going to work out for me,” he said.


Emerging-market countries are hardly a homogenous group, but they face similar challenges. The outflows of investor capital driving down their stock markets and pressuring their currencies have occurred just as the demand abroad for their products, whether commodities like oil or manufactured goods like automobiles, has begun to weaken.


In Brazil , leaders took pains to save wisely during the commodity boom, reform the country’s banking sector after a financial crisis in the late 1990s and diversify its trade partners. “This country has never been so prepared to face up to adversity as it is now, ” President Luiz Inacio Lula da Silva said last month. But a few days later the government empowered state-controlled banks to buy stakes in private financial institutions.


Experts say there was a consensus in Poland that membership in the European Union would buffer it from the worst of the shocks. That consensus has begun to break down.


The monthly mortgage payment for Jarek Wiewiorski’s apartment has gone up by a fifth, to 1,800 zloty, about $600. “It’s not catastrophic, but it’s painful,” Mr. Wiewiorski, 40, said. “One minute it’s America , the next it’s Hungary , and then suddenly, it’shere.”


2008-11-11/聯合報/G5/UNITED DAILY NEWS


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