The slump in emerging markets is a great buying opportunity

Fears of another 1990s-style crisis are overblown: developing countries are now more resilient to external threats and less dependent on rich countries’ business cycles, says Rupert Foster. They also look cheap.

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This year investors have had a stark reminder that emerging markets are risky assets. After climbing by around 50% throughout 2016 and 2017, the benchmark MSCI Emerging Markets index has slipped by over 10%, while some key emerging markets have fallen dramatically. Equity indices in the Philippines, Indonesia and China are down more than 20%. The Argentine peso has slumped by a third against the dollar. Emerging-market debt has sold off too. Factor in the Trump administration's protectionism, a headache for traditionally trade-dependent developing countries, and you can see why some investors fear we could see a series of economies blow up in a repeat of the Asian Crisis of 1997.

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Country/region2017 GDP($trn)Private consumption ($trn)2018 growth in consumption ($bn)% of world consumption growth
US20.413.9277.420.9
EU19.710.8162.512.2
China13.95.5409.530.8
India2.81.7129.89.8
Emerging Asia19.58.6611.446.0
Total Asia27.712.9688.551.8
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Rupert Foster

Rupert is an investment strategist and adviser at J & C Foster, providing Asian, Consumer and Global Equities Strategy advice to a number of family offices and portfolio management organisations. He writes on Asia and Global Macroeconomics for a number of investment publications including MoneyWeek and HL Investment Times.