With investors dumping perceived risk as global market turmoil continues, enthusiasm for wilder emerging "frontier markets" such as sub-Saharan Africa has faded - although their relative isolation may protect some economies.
For much of the first part of the year, some analysts described emerging markets in general as "decoupled" from troubled developed economies.
But a glance at stock market graphs from Vietnam to Ivory Coast shows them tracking most of the huge recent daily moves on Wall Street and other developed markets, plunging last week then recovering somewhat on hopes of a US rescue package for troubled banks.
As economic woes in the United States and Western Europe deepened, money has been pulled from emerging markets and plowed into safe havens such as US Treasuries.
That will likely hit investment flows through some of the growing number of frontier and Africa-facing funds that sprang up only months earlier.
"Enthusiasm for frontier markets has not been bulldozed but it has definitely been put on the backburner for now," said Arnab Das, head of emerging market research at Dresdner Kleinwort. "The days of people trading 40 sub-Saharan African economies are probably over for now."
Africa in particular was touted as a key investment destination earlier in the year on high commodity prices, good growth and increased political stability despite a range of high profile crises such as Somalia, Zimbabwe or Kenya's post-election violence.
The African Development Bank said on Thursday it still expected Africa's real gross domestic product growth to be 5.9 percent over the next two years, up from 5.7 percent in 2007.
Chief economist Louis Kasekende said foreign investment in Africa would likely be reduced, cutting available finance, but that continued demand both within domestic African economies and from emerging Asia would underpin growth.
Foreign direct investment to fall
"Africa is unlikely to suffer from the first round effects of the crisis because of its weak integration into the global financial system," he told Reuters in an e-mail interview.
A United Nations report on Wednesday said foreign direct investment into developing countries jumped 21 percent to $500 billion in 2007, with Africa attracting a record $53 billion.
But the report said companies were scaling back spending plans and global foreign direct investment would fall 10 percent this year. are down roughly a third so far this year. Fund monitor EPFR said global emerging markets equity funds lost more than 10 percent of their value last week alone, their worst performance since tracking began in 2002.
So far, the impact on frontier markets has varied across countries and asset classes.
Sri Lanka's stock exchange has lost around 10 percent of its value since early August, the impact of war with Tamil Tiger rebels combining with local and global economic issues.
Nigerian markets have fallen due to both global and local liquidity issues as well as falling oil prices, while Kenya's stock market has sold off while the local bond market has been relatively unaffected.
"Much of course depends on the degree of foreign investor involvement," said Standard Chartered chief Africa economist Razia Khan. "Much of sub-Saharan Africa is protected by a curious combination of strong domestic fundamentals and weak liquidity all combining to create a very low correlation with what is going on elsewhere."
The fledgling stock exchange in Ghana-- repeatedly held up as one of Africa's most promising new markets -- has generally continued to nudge to new record highs.
But such cases are hard to find. Neighbor Ivory Coast has lost almost a third from all-time highs set earlier in the year and saw a sharp sell-off last week in line with global markets. Zambia's stock market has also fallen.
The crisis is also seen denting demand for pending Eurobonds from several African countries aiming to tap international capital markets. Kenya said on Monday it would push ahead with a $500 million issue but interest is seen much reduced.
Falls in other emerging markets have also left any remaining optimists eyeing bargains in more mainstream emerging markets such as India and China, potentially reducing frontier demand.
"Prices in mainstream emerging markets have come down a lot," said Foreign and Colonial head of emerging equities Jeff Chowdhry. "You don't have to look at frontiers"