EM crisis seen as ‘biggest threat to investments’

The deterioration in emerging markets* has been seen across the board in recent months, with Russia, South Africa and Brazil standing out. The ongoing correction in Chinese demand and the resulting decline in commodity prices remain a major drag. EM capital outflows are back as a theme and these mean tighter financial conditions and a likely acceleration in deleveraging.

However, looking forward, there may be also positive signs to be found in EMs: If the Chinese authorities succeed in their attempts to stabilise the economy and there are no major defaults in other countries with excessive credit growth, such as Malaysia, Thailand, Turkey and Brazil, markets could slowly begin to anticipate a recovery in growth. Prices rising from low levels could lead to an improved market sentiment, with appreciating currencies, falling interest rates and a feeling that a growth recovery is getting closer.


*A survey commissioned by NN Investment Partners and carried out by Citigate Dewe Rogerson amongst 104 international institutional investors in December 2015 has found that 33% of them see such a crisis as the highest risk they face, followed by a black swan event (25%), a Eurozone crisis (22%) and the Fed tightening interest rates (22%).

Maarten-Jan Bakkum is senior Emerging Markets strategist, NN Investment Partners

Jonathan Boyd
Editorial Director of Open Door Media Publishing Ltd, and Editor of InvestmentEurope. Jonathan has over two decades of media experience in Japan, Australia, Canada and the UK. Over the past 17 years he has been based in London writing about funds and investments. From editing the newsletter of the Swedish Chamber of Commerce in Japan in the 1990s he now focuses on Nordic markets for InvestmentEurope. Jonathan was awarded Editor of the Year at the Professional Publishers Association (PPA) Independent Publisher Awards 2017. Shortlisted for the same in 2016, he was also shortlisted in 2017 and 2015 for the broader PPA Awards category Editor of the Year (Business Media).

Read more from Jonathan Boyd

Close Window
View the Magazine

I also agree to receive editorial emails from InvestmentEurope
I also agree to receive event communications for InvestmentEurope
I also agree to receive other communications emails from InvestmentEurope
I agree to the terms of service *

You need to fill all required fields!