For anyone investing in emerging markets, August was indeed a wicked month. The plunge of the markets in Asia wiped out first-half profits for the whole sector - not just the profits from the collapsing Asian markets, but the profits on the other markets which had not fallen at all. This month, professional investment managers are pondering what happens next. Is the concept of emerging market investment gravely damaged and should there be a flight to the supposed safety of more established markets? Or will people distinguish between the various regions more and more, switching from Asia to other areas like Latin America and Eastern Europe? It is really too early to try to answer these questions because the Asian markets and currencies have yet to settle down. Still, there are a couple of early pointers to the direction that investment flows will take in the coming months, three of which deserve attention. The first is the increasingly clear distinction between the economic policies of different Asian countries. One of the most alarming features of the markets last month was the systemic nature of the collapse: fundamentally sound currencies like the Hong Kong dollar were hit, along with Indonesian rupiah and the Malaysian ringgit. Now, gradually, an element of order is returning. A clear distinction is being made between countries whose governments have acknowledged past misjudgments and are starting to correct them (like Indonesia), those that keep on making policy errors (like Thailand), and those whose most obvious response is to blame everyone else (like Malaysia). This discrimination is much healthier than blanket condemnation. Ultimately what matters in determining the price of equities is the financial performance of the companies whose shares are being traded; and that performance is influenced profoundly by the quality of economic management of the countries in which they are based. Discrimination is all; systemic share price movements are irrational and destructive. The second pointer is that the flight from Asian equities has not meant a flight from the area altogether, for much of the money seems to be switching into local bonds. Currencies are starting to calm and while it will be many months before confidence is rebuilt, at least they offer clear value. James Capel's emerging market team notes that some Asian currencies are overshooting their equilibrium levels, which in theory ought to offer buying opportunities. Some of these buying opportunities will be in local bonds. The inevitable policy response to a crisis of overheating is a squeeze on public spending, as is happening in Malaysia. Anything which reduces pressure on the capital market, like cuts in public spending, makes fixed-interest investments more attractive. It follows once Asian currencies are perceived to have bottomed out, bonds will be the principal beneficiary. The third pointer is the fact that there has been virtually no fall-out beyond the Asian region. More than this, the demotion of the previous generation of stars has encouraged a hunt for new ones. BNP, which has recently established a unit looking at investments on the fringe markets, is promoting investment in a number of East European markets: the equities of Bulgaria, Serbia and Croatia, treasury bills in Ukraine and Romania, and municipal paper in Russia. The upgrading of Eastern Europe and the return to fashion of Latin America have been two of the features noted in a new study by American Express Bank's economics team. It has calculated a 'tiger index' which rates the quality of economic policy making and performance in different countries. The 'conventional' tigers, all in Asia, still come out top, despite the recent hiccups. But there are some other interesting countries creeping up the league. The Czech Republic and Poland are there, so are Argentina and Chile. Even Russia just creeps in. The team notes that the Asian countries have not, in general, improved their scores over the past 10 years, while countries in Latin America and Eastern Europe have. Of course, anyone wanting to invest in Russia must be aware of the risks involved. But the value is stunning. The whole Russian market is capitalised at US$39 billion. That is a bit more than the market capitalisation of Barclays Bank, but much less than HSBC and Lloyds. Rationally, should the entire commerce and industry of Russia be worth the same as that of our third largest bank? The potential is obvious: Russia does not need to do very well to do a whole lot better. A further small boost to Russian investment will come from its inclusion in the index of emerging markets run by the World Bank affiliate, the International Finance Corp, along with Israel, Egypt, Morocco and Slovakia. Being included in an index means little - except that it shows that the world investment community is taking these countries seriously. Of course, things could still fall apart in Russia as anywhere else. The disruption of Asia could spread to the other time zones. But each day that passes makes this less likely. It seems sensible to expect that the emerging markets of the American and European time zones will receive much more attention from investors in the months to come. At some stage, the hunt for more and more outlandish countries will reach its natural conclusion. But there is momentum in the quest for value in untrodden ground. Who would have thought, five years ago, that a large investment bank would be urging its customers to consider buying Ukrainian treasury bills?