'A lot to look forward to' for EM investors after a 'dismal' eight months

Despite a dismal performance in the first half of 2018 owing to a plethora of setbacks - such as the stronger US dollar, the Turkish crisis, rising trade tensions and policy turbulence - emerging markets have a lot to look forward to in the second half of 2018.

While the situation in Turkey appears to be centre stage now, we believe EM fundamentals remain broadly supportive of a recovery and inflation is relatively under control. EMs fall into bear market territory as Turkey crisis, commodities and Tencent bite EM inflation within the range of 3.5% - 4% surpasses developed markets, it is much lower in comparison to its own history over the past decade. Foreign exchange reserves for the 12 largest EM economies, excluding China, stand at $3.15trn compared to just $2trn in 2009 enabling EMs to withstand the current crisis.  We contin...