Investors flee emerging markets
Emerging markets saw net outflows of about $30bn last month, as investors took fright.

Investors are souring on emerging markets. The asset class saw net outflows of about $30bn last month, says Edward Glossop of Capital Economics – the biggest outflow since the turmoil of March. Their caution is understandable, says Yen Nee Lee on CNBC. From Brazil to India, emerging markets are host to some of the world’s worst coronavirus outbreaks.
Yet some markets remain in favour. Take China, South Korea and Taiwan, where exporters are cashing in on the “upswing in the tech cycle” and the virus remains under control, says Ben Powell of asset manager BlackRock. Investors’ growing pickiness is especially evident in debt markets, says Jonathan Wheatley in the Financial Times. Chinese government bonds attracted $89bn through the end of August; a ten-year bond at 3% per year evidently looks like a great deal to buyers. By contrast, the 7.3% yield on offer in Brazil has far fewer takers, with $9bn being pulled from Brazilian government bond markets this year.
Value hunters will find a “panoply of bargains” in emerging markets, with stocks trading at “less than half the average price-to-book ratio” of US peers and offering generous yields, says Craig Mellow in Barron’s. Yet the coming months are likely to be rocky. For those with the stomach to bet on a “catch-up run”, Brazil looks “the best candidate”. The market has plunged this year but solid fiscal support and tax reforms could yet spark a rally.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
-
Nationwide: UK house prices creep up by 0.2% - are we heading for a rebound?
Nationwide’s latest house price index shows property prices inched up by 0.2% as demand warms up - will this trend go into 2024?
By Kalpana Fitzpatrick Published
-
December 2023 NS&I Premium Bond winners revealed - have you won the jackpot?
Two Premium Bond holders are now millionaires as NS&I reveals December winners. Find out if you’re one of them
By Vaishali Varu Published
-
M&S shares shift from frumpy to fabulous as pre-tax profits are up by 56%
M&S is performing strongly and has announced it will pay a dividend for the first time since the pandemic.
By Dr Matthew Partridge Published
-
The rise and fall of Sam Bankman-Fried – the “boy wonder of crypto”
Why the fate of Sam Bankman-Fried reminds us to be wary of digital tokens and unregulated financial intermediaries.
By Jane Lewis Published
-
Three defence stocks set to flourish in an era of instability
A professional investor tells MoneyWeek where he’d put his money. Tom Bailey highlights three defence stocks that look promising.
By Tom Bailey Published
-
EasyJet shares are volatile but enticingly cheap
The EasyJet group has shrugged off the cost-of-living crisis, restarted dividends and shares look good value.
By Dr Matthew Partridge Published
-
The fallout from the war on landlords
Investors fleeing the market and the rise in rents are affecting us all.
By Charlie Ellingworth Published
-
Eight small-cap trusts to bet on
Funds investing in market minnows are out of favour, but the cycle will turn. Here are the best bets.
By Max King Published
-
Trust in US TIPS to beat inflation
In an inflationary market TIPS, the US Treasury Inflation-Protected Securities are most compelling says Cris Sholto Heaton.
By Cris Sholto Heaton Published
-
What is Vix – the fear index?
What is Vix? We explain how the fear index could guide your investment decisions.
By Dr Matthew Partridge Published