Flagging Faith in Emerging Markets
Demand across many Emerging Markets has fallen over the last year plus, and weakening economic growth has led to $1 trillion in capital outflows over the past 13 months. This represents roughly double the amount that fled during the financial crisis, and it reflects investors decreasing appetite for higher risk investments in those areas.
Weakening currencies and falling commodities prices are to blame, and investors are simply reallocating towards safer shores, such as the U.S. equities markets. Emerging Markets aren’t dead, just slowing, and they are certainly not the engine for global growth that they were during the 2003 – 2007 economic expansion.
But that’s ok—the developed world is pulling them along, albeit at a slower pace than recent memory.
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