Emerging Market Turmoil Isn't Too Bad

Emerging markets are in free fall. Currencies are reeling, stocks are tanking and commodities are sinking, evoking memories for many investors of the financial crisis that hit Asia hard in 1997 and 1998.  Concerns over a slowdown in China have dented confidence, while investors have also fretted over the impact on emerging markets of an imminent increase in interest rates by the U.S. Fed.

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Emerging Markets Rally, for Now

At the start of the year, the accepted strategy for investing in emerging markets could be summed up in one word—don’t.  But developing-country stocks have surged nearly 13% in the past eight weeks, largely because the demon that was stalking them, the arrival of higher U.S. interest rates, has likely been pushed back. Currencies and bonds have also rallied, giving some countries and businesses a much-needed chance to clean up their books to prepare for higher rates.  The reprieve is temporary.

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Emerging Markets to Gain Most from ECB Easing

The European Central Bank has given investors an excuse to keep buying in emerging markets into the second half of the year, as a worldwide “hunt for yield” runs out of assets to buy in advanced economies.  They will have to be more selective than they were during the post-financial-crisis stampede into developing countries, but as the global economy stabilizes and rich-country interest rates plumb new depths, global investors can now finally put the “taper tantrum” behind them.

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-Igor P Purlantov

Jobs Data Lift Emerging-Market Currencies

Emerging-markets currencies climbed against the dollar on Friday after the U.S. jobs report, as traders bet improvement in the labor market in May wasn't strong enough to push the Federal Reserve to an earlier increase in interest rates than expected.  Many investors in the developing world have kept a close watch on U.S. economic indicators to gauge when the Fed will raise rates. Higher U.S. rates, analysts say, could strengthen the dollar and draw cash out of emerging markets.

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-Igor P Purlantov

Emerging Markets Provides Opportunity For Investors

For the better part of a year, investors have been reading about a “crisis” in emerging markets. By now you’re likely familiar with the myriad of headlines that include buzzwords such as “higher inflation,” “slower growth,” “political turmoil,” “rising interest rates” and “currency depreciation.”  We saw a spike in these negative headlines near the lows in early February of this year. Although there is always some element of truth in these fear-inducing headlines, the question for investors is, "What should I do about them?"

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-Igor P Purlantov

Politics Could Whip Up New Emerging Markets Storm

A stabilization in emerging markets after January's rout may turn out be the calm before the storm if political flare-ups and Fed policies provide the spark for the next round of selling.   Currencies in Turkey, South Africa, Hungary and Russia, which suffered violent sell-offs over the past month, have recovered slightly, partly because central banks have fought back via interest rates hikes or exchange rate interventions.

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Three Truths About Emerging Market Investing

Investors continue to abandon emerging markets . As I write in my new weekly commentary , last week marked the 14th week of outflow from emerging market equity funds and the largest weekly outflow seen since August 2010.  Last week's selloff came as number of emerging market countries - including Turkey - raised their benchmark interest rates in an effort to stem the pressure on their currencies , and as political turmoil in the Ukraine and Thailand continued. 

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