Goldman Sees Record ‘Wall of Money’ Flooding Emerging Markets

Net capital inflows into emerging market economies are running at record levels, pushing up asset prices and raising the risk governments may impose capital controls, Goldman Sachs Group Inc. said in a research report today.

Capital inflows into emerging markets are running at $575 billion a year, more than ever before and 20 percent higher than before the world financial crisis, according to an e-mailed report by Robin Brooks, a senior foreign exchange strategist for Goldman in New York. Low interest rates in the developed world are leading investors to seek higher returns in faster-growing emerging economies, he said.