Bridging the gap

The run-up in emerging market asset prices has understandably led some commentators to speculate that they may be ripe for a sizeable correction. In the past, a sharp fall in asset prices in one country has often brought contagion to other countries, as international investors took flight and moved into less volatile assets. Investors interested in emerging market assets need to assess whether such economies are now better equipped to cope with potential shocks. They also need to be aware of the growing trade linkages between various emerging markets, rather than merely viewing them as a wa...