The Foreign institutional investors have been the driving force in pushing up the stock markets across the emerging markets. China has seen a 60% rise from the bottom, while India has seen a 90% rise from the bottom. Even Russia and Brazil have seen a sharp recovery in the year 2009.
And all these have been due to the pumping in of cheap dollar funds by Foreign funds into these markets for short term speculative gains. Now the US government is tightening the fund supplies and also the speculative business of hedge funds and mutual funds. That has forced most of the fund majors to pull out slowly and steadily out of the emerging markets.
So expect another 10% to 20% correction in all these markets in the next one of two months as no new fund flow may be there.