Given the scale and intensity of the crisis that has gripped large parts of the financial system, it can be easy to forget that not all activity has ground to a halt. In large parts of the corporate sector – particularly the commodities industry – executives could be forgiven for wondering what all the fuss is about. But the sense of detachment from London and New York is most pronounced in emerging economies. Viewed from Mumbai, Singapore or Shanghai, the turmoil in the capital markets looks like a distant local problem with little relevance or impact on the other side of the world. In China and India, stock markets have been hitting new highs. Rather than suffering from a shortage of liquidity like their counterparts in the west, Chinese banks are grappling with a surplus.
It remains to be seen whether this sense of detachment will persist, particularly if the US economy stops growing at the same rate it has maintained in recent years. For the time being, however, the decoupling of emerging markets from the west has created a ripe opportunity for acquisitions. Recent activity by sovereign wealth funds, which have taken stakes in a range of US and European financial institutions, has added to the sense that the flow of activity – from west to east – has been reversed.
