Is Emerging Market Volatility Here to Stay?

Emerging markets have had a volatile 2014, notably affecting emerging markets such as Turkey, South Africa and Ukraine. Is this the new norm?

Ashburton Investments 25 June, 2014 | 11:29AM

This article is part of Morningstar's "Perspectives" series, written by third-party contributors. Here, Derry Pickford, Macro Analyst, Ashburton Investments discusses the volatility in emerging markets.

Recent bouts of volatility have put the spotlight firmly back on emerging markets.
Dramatic currency and stock market falls have made headlines since the US Federal Reserve first hinted at tapering its quantitative easing programme back in May 2013. So far 2014 has seen similar bouts of volatility, notably affecting emerging markets such as Turkey, South Africa and Ukraine. So what’s happening to upset the emerging market apple cart?  Are these isolated events simply part and parcel of emerging market investment?

Self-contained

The popular image of emerging markets is that contagion is an endemic problem – if one emerging market falls, they all go down. In fact, statistically emerging markets have more of their own idiosyncratic drivers than developed markets do. Crises in developed markets may be fewer, but they’re more likely to spread to other developed markets.

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About Author

Ashburton Investments  are the investment management arm of FirstRand Group, one of Africa’s largest financial services companies.

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