Should you strike while the EMs are cool?

Emerging markets have suffered outflows this year as investors recycled money into Western regions – but the longer-term case for the East remains intact. While we see the market perception of this selloff as exaggerated, emerging equities have underperformed during the six months to the end of March, with areas such as Turkey worst hit. This correction was down to two major factors: a recovering US presenting beneficial asset allocation opportunities; and lingering inflation fears in emerging countries. Inflation concerns are justified, with a recent 9% level in Indian wholesale prices ...