A number of investors with a keen appetite for risk have hedged bets on Zambian treasury bills. After a boom in copper prices, Zambian government bonds, yielding 25% for five year paper, returned more than 40% so far this year for hedge funds strong enough to take on increased levels of risk in developing markets.

In an interview with New York Times, Simon Nocera had to draw the line when his broker tried to get him into Zambian treasury bills. “It was pure, baseless speculation,” said Mr. Nocera, who has been investing in developing markets for more than 15 years. “If I am going to play the casinos, I would rather go to Las Vegas.”

Despite the minor devaluations and market turmoil this week in Turkey, South Africa and Indonesia, there is nothing indicating that developing markets are going to collapse. Dollar reserves are at historic highs and the economies of many of these countries are vastly improved, through high commodity prices and robust exports.

China and South Korea now hold more than a trillion dollars in reserves between them, and even companies like Gazprom in Russia and Samsung in South Korea have emerged as global conglomerates that are among the world’s largest companies.

Hedge funds that invest in emerging markets took in one of their highest weekly sums ever last week, bringing this year’s figure to $33 billion, already outpacing last year’s record $20 billion, according to EmergingPortfolio.com.

In India the market that has shot up 141% over the last two years. In Russia, where the stock market is up 150% over the last two years and investors have been piling into commodity-based stocks. Since 2001, the Pakistani stock market capitalization has exploded from $10 billion to its current $55 billion, and foreign investors have only just started to dip into the market recently.

But with the sudden input of new money, some investors worry that hedge funds which are among the largest shareholders of companies in Turkey, Argentina and Mexico, may not have the experience to withstand the instability of these markets.

International hedge funds this year have also doubled to 20% their share of the Brazilian coffee futures market, whose annual turnover amounts to some $2 billion. Hedge funds only actively started to move into this market in the second half of last year. The hedge fund’s share of the coffee market is expected to rise to 30% by the end of 2006. Brazil represents about one-third of the world’s coffee output.