Yet again the question for emerging markets is whether they offer an incipient disaster or an incipient buying opportunity. The past few months have seen a vintage sell-off, with familiar and easily described causes.
At home, they involve messy politics, leaders who are unpopular abroad, and deficits that require borrowing to fill. In the developed world, the catalysts include the slowdown in the eurozone, the growing threat of tariff barriers, and most importantly the move towards tighter monetary policy, as higher US rates attract funds and weaken emerging currencies against the dollar.
Also, an unplanned consequence of last year’s US reform to encourage companies to repatriate dollars held overseas is that non-US banks now find it harder to access dollars.