The bright spots in emerging markets

ON EMS

The recent efforts of Turkey's central bank remain deeply unconvincing while Chinese and Russian markets are stuffed full of state-owned enterprises. But there are bright spots for EM investors, argues Baillie Gifford's Tim Campbell.

It should not come as any great surprise that where emerging countries have been enjoying a turbo-charged credit cycle (Indonesia, Brazil, Turkey, China anyone?), the adjustment to slower growth and a more normalised cost of capital is unlikely to be easy. The recent efforts of the Turkish central bank remain deeply unconvincing. Rate hikes elsewhere will have a varying degree of success but as we know, the longer the party, the more severe the hangover. At least there does seem to be increasing recognition of the problem – step one on the path to recovery – but the next part is the har...