Guest post: emerging and diverging – a new way to understand EMs | beyondbrics

With the US and Europe mired in economic uncertainty, investors have turned to the emerging markets as a source of higher growth and richer returns. But EMs face new economic and political challenges of their own that will cause them to diverge from one another in the coming years. Investors who fail to anticipate this divergence will underestimate risks in some countries and miss opportunities in others.

To look at asset prices alone, it is clear that emerging markets are fast becoming diverging markets. Over the past year, Turkey’s stock market boomed 50 per cent, while China’s stayed flat. The Hungarian forint appreciated 10 per cent while the Brazilian real fell 11 per cent. For a class of assets that used to move broadly in tandem with each other, this is a new and growing trend.

* username: rupertbu