EM earnings: Where do we go from here?

Emerging markets (EM) have endured a tricky spell this year as the impact of US trade policy changes and slightly weaker earnings than expected rocked the sector.

While the asset class is down some 10% year to date, the vast majority of the losses are coming from tumbling currencies. The Turkish lira, for example, dropped 25% in August - a show of no confidence in President Recep Tayyip Erdogan - and South Africa is now being hit. All EM currencies are therefore extremely cheap, but unlikely to fall much longer because countries are probably going to start raising interest rates. Gallery: Six reasons the emerging markets rally will continue in 2018 That is what the markets want to see, and it is important to note the risk of contagion acr...