Emerging markets about to shift from Goldilocks to the bears, analysts warn
Moscow — Aberdeen Standard Investments and Nomura Holdings have a word of caution for investors marvelling at the relative resilience of emerging debt markets in last week’s global sell-off: the worst is still to come. They argue that the turmoil that shook up global stock markets was a symptom of a paradigm shift, from an environment that favours developing markets, to one which doesn’t. As inflation concerns push up bond yields and unwinding stimulus tests liquidity, the risk assets that have enjoyed a torrent of inflows in recent years could be in for a shock. Along with other high-yielding assets, emerging markets (EM) have been the darlings of the so-called "Goldilocks" environment of excess liquidity and low volatility, with bonds and equities attracting more than $150bn of inflows last year. While that was in part supported by rising growth in developing economies, it won’t be enough to sustain inflows, according to James Athey, a senior investment manager at Aberdeen. New wo...
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.
Subscribe now to unlock this article.
Support BusinessLIVE’s award-winning journalism for R129 per month (digital access only).
There’s never been a more important time to support independent journalism in SA. Our subscription packages now offer an ad-free experience for readers.
Cancel anytime.
Questions? Email helpdesk@businesslive.co.za or call 0860 52 52 00. Got a subscription voucher? Redeem it now.