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Panic in emerging markets: why now?
As if emerging markets didn't have enough to worry about, concerns about military intervention in Syria have simply increased a sense of deep concern. Equity markets from Brazil to India to the Philippines have fallen sharply in recent weeks. Currencies have tumbled.
Mads Koefoed, Saxo Bank's Head of Macro Strategy, says there are numerous reasons why this is happening now. He says even though the world knows that the Federal Reserve will soon start tapering their bond buying programme, it's as if investors have only just realised. Outflows of capital from emerging markets to more developed markets are making the situation worse.
Mads points out that it's very country dependent. India is particularly hard hit with the rupee hitting record lows. The problem for them is that they're very reliant on the imports of crude oil so the benefits of a weaker currency as far as exports are concerned won't be felt.
Koefoed also considers China. It's slightly more insulated from any crisis and he expects growth to be reasonably strong but GDP could fall to 5% fairly soon.
02:33 minutes
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