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Capital flight from EM due to investor “herd instinct”

MOSCOW, February 4. /ITAR-TASS/. First Deputy Chairwoman of the Central Bank of Russia (CBR) Ksenia Yudaeva blames investment outflow from Russia and the emerging markets in general on what she described as investors’ “herd instinct”.

“Central banks of developed countries have recently invented a number of anti-crisis instruments,” she said in an interview with Itar-Tass. “And now investors do not quite understand how these anti-crisis programs will be wound up and what will happen in this connection.” Investors often yield to the “herd instinct”, she added noting the current capital flight from emerging markets, among them Russia.

However, Yudaeva believes, the present global economic situation “has nothing in common with what happened in 2008.”

“Then we observed an instability explosion in the global financial system and a global economic crisis. Mature markets, primarily the US, were the epicenter. But it is not the case now. Growth started in most mature economies. The acute phase of the credibility crisis in the financial sector is in the past,” Yudaeva said. “This, nonetheless, has not yet decreased market volatility,” she concluded.