EM sell-off: whatever happened to differentiation? | beyondbrics

EM sell-off: whatever happened to differentiation? | beyondbrics:



"For all the talk of differentiation, emerging markets are having a bad Monday. Major currencies, such as the Turkish lira and Indian rupee have been hit; equity and bond markets are falling. As Benoit Anne of Société Générale put it, “global emerging markets are now trading in full-blown panic mode”.



But the recent message to investors from analysts was to look beyond emerging markets as a single asset class. “The real lesson from recent events is that the need for investors to discriminate between individual EMs has never been greater,” said Neil Shearing of Capital Economics. Clearly, the lessons are not being heeded.



EM currencies are feeling the pinch across the board. The biggest faller is the Turkish lira, which has continued to slide. It is now at 2.37 lira to the dollar, another 2 per cent plus depreciation, and another record low. Other currencies that have been under recent pressure have fallen: the rand is down around 1 per cent to 11.2 to the dollar. The Indian rupee, which had a torrid 2013, is down 0.6 per cent to over 63 to the dollar, a 2-month low."



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