More than $1,300 billion has been wiped off emerging market stocks this year. It is far less than the $9,000 billion lost from the “emerged” world's bourses, but enough to sink the notion that the Bric economies - Brazil, Russia, India and China - have “decoupled” from the West.

In truth, money flows controlled by Western managers were behind the bull runs previously celebrated from Rio to Moscow. The collapse of Lehman Brothers last month sparked a record withdrawal of cash from emerging market stocks, triggering their worst quarterly performance to date. Behind the rout was a global “bubble of fear”, according to Michael Hartnett, the Merrill Lynch strategist.

Yesterday, the paranoia pumped up by the seizure of global credit markets described by Mr Hartnett seemed to have been dramatically inflated by tumbling commodity prices. The prospect of low metal and fuel prices torpedoed Brazil and Russia's largest companies.

At the same time, Bric banks were sunk by fear that they will be swamped by the global credit crunch. Some are already nursing serious damage: China's Ping An Insurance fell 8per cent after disclosing a $2.3 billion loss from exposure to Fortis, the Belgian-Dutch financial group.

You can still find bullish fund managers noting India's long-term potential and the prospect of rate cuts, but most analysts appear shell-shocked. Some even fear that the world economy has broached a point of no return. “The question is whether we are going to have a rolling back of globalisation and therefore emerging markets will not be able to continue growing in the same way,” Arnab Das, of Dresdner Kleinwort, said recently. With such views doing the rounds, it would be brave to predict an early end for the “bubble of fear”.

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