It’s like being midway through a detective thriller: it’s clear there is something going on in emerging markets, but it’s not clear what. At least not yet. Two things are apparent, however. First, as of last week emerging-market stock markets are officially in bear territory. Second, after two countries, Pakistan and Argentina, have thrown themselves to the mercy of the IMF, the organisation’s MD, Christine Lagarde, has warned of rough seas ahead for emerging markets. In a speech last week, Lagarde warned of “market corrections, share exchange rate movements and further weakening of capital flows”. Yet even in its initial stages this particular crisis is unusual. Even the title “emerging-market crisis” is something of a misnomer since many countries normally tagged in this category are very far from being in a crisis situation. The issue for investors is trying to work out which countries are vulnerable and which not. That depends a lot on the extent and denomination of the country’...

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