Emerging markets decline now in full-blown bear territory
With six equity exchanges worth a combined $8-trillion in a bear market, emerging-market stocks’ decline is no longer a misstep but a plunge
The decline in emerging-market stocks isn’t a misstep anymore — it’s now a full-blown plunge. With China, the world’s second-biggest stock market, extending its losses from a bull-rally peak to 20%, as many as six equity exchanges worth a combined $8-trillion are in a bear market. The benchmark index for the asset class is a whisker away from the threshold. Two eastern European nations are also heading for a bear market, while 10 other markets have crossed the half-way mark, a correction of 10% from their highs. Bear markets are a key signal for trend reversals as investors use them to verify whether the previous bull market has ended or the sell-off is just a correction in a rally. In the latter case, the 20% loss threshold acts as a bounce-back point. Here’s the state of play in emerging markets: Bear markets When the slump began in late January, after a two-year, $8-trillion rally, some investors expected deeper losses in markets with the highest valuations. But in the past five ...
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