David A. Wyss, chief economist of rating agency Standard & Poor’s, says that the next “bubble” could be in the debt and equity markets of emerging market economies, including China and India.

He also lumped markets in Mexico, Brazil, Chile, much of South-East Asia, countries in Eastern Europe, parts of Africa and Latin America in the potential bubble areas.

Wyss said there is surplus of liquidity across the world and “if one tries to stamp out a bubble in one place, it resurfaces in another.” Speaking on the US subprime mortgage woes, Wyss said the real extent of losses may not peak until 2009. While the panic around the subprime issue seems to have subsided for now, the losses are currently $100-150 billion (Rs4-6 trillion), or under 1% of the $16 trillion US mortgage market, according to the US feral reserve.

Wyss estimates that at least $600 billion could come into the Indian markets from Russia, Canada and also the Organization of the Petroleum Exporting Countries (Opec), which includes Iraq, Indonesia, Iran, Kuwait, Libya, Angola, Algeria, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and Venezuela.

India, according to Wyss, should be “cautious” about the strengthening rupee, inflation and the risks that may emerge of the changing political scenario. Crisil Ltd, the Indian subsidiary of Standard & Poor’s, projects that the Indian economy may grow 8.6% in the year ending 31 March compared with 9.4% in 2006-2007.