EM recovery - stock selection is key

IT has been almost 12 months since former US Federal Reserve chairman Ben Bernanke on May 22, 2013, spoke of "tapering" or reducing the Fed's quantitative easing monetary stimulus programme, a shock statement that led to a flight of capital out of emerging markets (EMs).

After nine months of volatility, floundering EMs were then hit in early 2014 by geopolitical tensions between Russia and Ukraine, weaker-than-expected macroeconomic data from China, and political unrest in Thailand and Turkey. Also damaging were weakness in a number of EM currencies and inflation concerns, which led central banks in India, Brazil, Russia, South Africa and Turkey to raise interest rates during the first quarter of this year. Howe…