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The steep fall in emerging markets this year has proved that, whether we like it or not, they will not trade at a premium to developed markets and will remain vulnerable to global cues. However, we still believe these markets still offer superior returns versus the risk and good diversification, particularly if investors include some smaller EM countries that have so far been neglected.
The collapse of EM markets
The eurozone debt crisis, weaker growth in the US and the risk of outright recession in Europe have hit markets hard, yet emerging markets have turned out to be the main victims (along with Western banks). The crisis, which started in August with the decline of emerging stocks and unfolded more broadly in September...
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