Wall Street Hunts for Its Next Bubble
Emerging markets upswing could mirror '98 tech boom
By Kevin Spak,  Newser Staff
Posted Sep 20, 2007 12:48 PM CDT
Darys Estrella, left, CEO of the Dominican Republic Stock Exchange, and members of her delegation, meet with specialist Anthony Rinaldi, right, during her visit to the floor of the New York Stock Exchange,...   (Associated Press)
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(Newser) – With the Fed’s rate cut in place, Wall Street has visions of another bubble—this time in emerging markets. The Dow skyrocketed 2.5% on news of the cut, but even that was dwarfed by 4.2% gains in the Bombay Sensex and 4.3% in Brazil’s Bovespa. Fast-growing economies could benefit most, the Journal explains, from easy-flowing cash.

The situation is a “mirror image of 1998,” when Asian turmoil led to free-flowing cash for fledgling tech stocks. But emerging markets have grown even amid rising interest rates, meaning they may now be less volatile. Still, analysts urge caution. “Few people are saying, ‘Oh my God, it's a bubble,’” one said. “They're saying, ‘Whoopee, it's a bubble.’”