Recent volatility in the emerging markets has left many investors heading for the exits. To help make sense of events around the world, asset managers turn their eye to emerging market turbulence. Here are this month’s top five posts:
- J.P. Morgan: Tapering vs. Tightening – J.P. Morgan’s Emerging Markets Strategist George Iwanicki discusses the causes of volatility in the emerging markets. Iwanicki asserts that the slowdown in these regions is caused by cyclical business factors, leading to subpar growth. The article elaborates on challenges to emerging markets caused by the Fed’s tapering, which has led to outflows from global markets and currencies.
J.P. Morgan on Emerging Market Growth
- Federated: It’s an Adjustment, Not a Crisis – Federated’s Ihab L. Salib examines the causes and effects of the emerging market currency turmoil that shook markets in January. The article explains that despite fears, a collapse in EM currencies like the 1997 Asian Financial Crisis is unlikely. Instead, Salib opines, issues in different emerging market nations reflect localized problems rather than a brewing crisis.
Federated on Emerging Markets
- Fidelity: Weak Emerging Markets: Business Cycle Update – Fidelity’s Dirk Hofschire and Lisa Emsbo-Mattingly address growth prospects around the world, noting that emerging markets are being negatively impacted by declining liquidity as a consequence of the QE taper. Fidelity’s experts note that this is driving borrowing costs up in Brazil, India, Indonesia, Turkey and South Africa. Additionally, political turmoil may create investment challenges around the world.
Fidelity on Emerging Markets
- MFS: Emerging Market Debt: Wildfire or Controlled Burn? – MFS’ Institutional Fixed Income Portfolio Manager Robert Hall also weighs in on the risk of a financial crisis, explaining that fundamentals are much stronger today than during the Asian crisis in 1997. Hall explains that issues differ on a country-by-country basis, and that investors should remain focused on fundamentals when investing in emerging market bonds.
MFS’ Robert Hall on MFS
- Oppenheimer: Don’t Let EM Noise Shape Your Decisions – Oppenheimer’s George Evans, CIO for Equities, discusses investor anxiety surrounding slowing growth. Evans warns against focusing too much on negative headlines, and instead recommends understanding that different countries and companies should be treated on a case-by-case basis.
Oppenheimer’s George Evans on EM Worry