When investors worry about emerging markets, they tend to concentrate on the big global picture. Their main recent concern has been emerging economies’ vulnerability to tightening US monetary policy, which will prompt money to leave traditionally risky assets and head back to safer markets.
But many emerging markets have internal weaknesses too. In the past few years, households and companies throughout the developing world have gone on debt binges that easily rival the West’s spendthrifts.
It’s not just China. Private non-financial sector debt has reached 200% of GDP in Korea, compared to 180% in Australia and America, notes Société Générale [...]
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