Turmoil in Emerging Markets Tests Resilience of US and Europe

The most important question confronting investors is whether the United States and Europe will remain insulated from the economic turmoil that is now sweeping through the emerging markets.  Janet Yellen, who chairs the US Federal Reserve, is confident that the prospects for the world's largest economy "appear solid", clearing the way for an interest rate rise by the end of the year.In a speech last Thursday, Dr Yellen acknowledged that the Fed was keeping a close eye on what she described as "developments abroad", before adding that that "we do not currently anticipate that the effects of these recent developments on the US economy will prove to be large enough to have a significant effect on the path for policy".

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Smarter Way to Play an Emerging Market Rebound

Emerging market funds – targeting shares in fast-growing Asian and South American countries – have delivered losses averaging 12pc over the past three years.  Much of the damage occurred in recent months as anxiety about the strength of economic growth rocked the markets. An upward move in US interest rates – which did not materialise last week, but will eventually arrive – is expected to knock these regions further.  Heavy commodity price falls, which have also depressed emerging market currencies, show no sign of reversing.

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Bargains in Emerging Markets Can Be Risky

As emerging markets reel from their worst selloff in years, some investors are picking through the ruins, convinced that the massive slide in stocks and bonds has uncovered rare opportunities to buy on the cheap.  Their shopping list includes Mexican bonds, Philippine banks and Chinese Internet companies. The key, they say, is to be selective—while bargains abound, many believe that emerging markets remain fraught with peril.

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China and Emerging Markets Capital Crisis That Wasn’t

New figures from China’s central bank point to large, but not crippling, outflows  The end-of-summer meltdown in emerging markets, when the MSCI stock benchmark collapsed by 9% in August, created a bigger fear than just stock losses—chiefly that emerging countries are experiencing crippling capital outflows.

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