Little more than a year after global financial markets collapsed after the US housing bubble burst, developing countries are giving birth to a new asset bubble -- one that investors bet will keep growing for some time.

Cash has been flooding emerging markets since March as investors in pursuit of strong returns see countries such as China and Brazil leading global growth in the next few years, while developed world economies remain nearly stagnant.

Those capital flows, which have been super-sized by the ample liquidity measures taken by central banks to fight the crisis, have lifted emerging market stocks more than 70 percent so far this year, according to the benchmark MSCI stock index.

In Latin America, stock prices have soared over 90 percent this year on the MSCI while currencies like the Brazilian real gained more than 30 percent.

And even though most of the gains simply account for a rebound from last year's meltdown, some investors predict the rally is just starting, with only short-term corrections coming along the way.

"I think there may be a bubble forming in some emerging market stocks, not just in Latin America, you see the same kind of pattern in Asia," Standard & Poor's chief economist David Wyss said.

"There is just a lot of cash looking for yield and not quite believing that you can't get 19 percent a year anymore," he said, referring to the average returns of the S&P 500 during the 1980s and the 1990s.

Jeremy Grantham, co-founder and chief investment strategist of money manager GMO, forecast that the premium over earnings that investors pay for stocks in some emerging markets could reach 50 percent in coming years, as those countries have "the people, the savings and the attitude" to convey a compelling growth story.