The flow of funds into EMs: Where next?

Possible challenges to flows

Performance of emerging markets (EM) assets has always been a function of internal fundamentals and the external risk environment.

The steady rise of US Treasury yields has generated debate in the community around the likely performance of emerging markets in future.  With the risk backdrop changing, and a number of countries experiencing idiosyncratic issues, we think the market is shifting from a beta-driven modus towards a more idiosyncratic, alpha-dependant phase.  Much of the recent volatility in EMs has been driven by idiosyncratic factors relating to specific countries. Somerset manager warns of impending EM credit crisis In Argentina, we have seen the central bank respond to a shift in foreign inves...