Managing threat from emerging markets
Investors in emerging markets should focus on current account-surplus countries at this time as these are less vulnerable to foreign capital flows
Add BT as a preferred sourceTHE past week has seen renewed concern about the emerging world, reflecting a combination of political problems in several countries including Turkey and Ukraine, a currency devaluation in Argentina, and ongoing unease about Chinese growth. Such anxiety also reflects the impact of the US Federal Reserve slowing its monetary stimulus at a time when parts of the emerging world are vulnerable.
This has seen falls in emerging market shares and currencies. Moreover, fears about exposure to the emerging world and a possible threat to global growth have seen share markets in advanced countries fall nearly 4 per cent over the past week. Concern has returned that we may see a rerun of the 1997-98 Asian/emerging markets crisis.
Our assessment remains that another Asian/emerging markets crisis is unlikely. However, it is clear that the secular cycle has now turned against shares in emerging markets (EMs) relative to those of developed markets (DMs).
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