There is a long-running narrative about emerging markets, with which most of us are very familiar. They are faster growing, more dynamic economies than in the western world. Their fabled, rising middle class is going to fuel new consumption and the development of new brands. They are, in short, the future, and the time to invest is now. Yet, since February, emerging markets have run into a bit of a brick wall, and not for the first time in recent years. What gives?
The proximate cause for concern is emerging market currencies. This is usually a sign of other problems. The JP Morgan index of EM currencies, which surged in 2017, has given up nearly all its gains, dropping to its lowest level in a year. Hardest hit have been the Turkish lira and the Argentine peso.