Emerging markets 'decoupling' theory is back, but it's still wrong

The 'decoupling' theory - that emerging markets could shrug off a downturn in the industrialised world - was proved wrong as the downturn went global. Now it's back in fashion. But that doesn't make it right.

Remember decoupling? The theory, which was fashionable two years ago, held that emerging economies and markets, notably Asia, could shrug off a downturn in the industrialised world.

But as global growth and equities slumped last year, emerging economies tanked, and the MSCI Emerging Markets index fell by 53% from its peak. Yet now decoupling is back in fashion.

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