There has been a large increase in the number of foreigners participating in our market, as international investors across the globe have searched for higher yielding assets, including ours. Therefore, some consider that as a region, we are vulnerable to any increase in global risk aversion stemming from the sub prime crisis.
Proponents of this view suggest that when investors get scared, they sell their riskiest assets (among them investments in emerging and pre-emerging markets) in search of safe havens, as they reassess their appetite for risky assets. It is therefore felt that now, with the sub-prime crisis, this interest will dry up.