After the fall - The case for emerging markets revisited.

Given the disappointing performance of emerging stock markets in 1997 and 1 998, it is understandable that investors are now questioning the role of th ese markets in long-term asset allocations. With emerging markets investmen ts appearing more unstable today than they did just three years ago, do the benefits still outweigh the risks? The author sees the declines of the pas t two years as nothing more than an extreme manifestation of the high volat ility that makes emerging markets a diversifying addition to a global stock portfolio. The problems behind the recent plunge are reversing, and there are no indications of fundamental changes in these markets that would lesse n their longterm return potential.