Are we heading for “taper tantrum 2.0”? asks Duvvuri Subbarao in the Financial Times. In 2013 concern that the US Federal Reserve might cut back – or “taper” – its quantitative easing (QE) programme triggered the “taper tantrum”, a sell-off that hit emerging markets hard; India’s rupee plunged by more than 15%.
Now, as the Fed flirts with tighter monetary policy once more, policymakers have a feeling of déjà vu. No wonder. Many emerging economies have benefited from ultra-low interest rates in the developed world, which has sent investors looking for higher returns overseas. Tighter US monetary policy and a stronger dollar could see these capital flows swiftly reverse, leaving turmoil in their wake.
Policymakers in poorer countries don’t just have financial markets to worry about, says The Economist. A global divide is emerging between wealthier countries, which are vaccinating quickly, and poorer nations still struggling to do so.
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
“In the world’s poorest 29 economies… only 0.3% of the population has received even one dose of vaccine.” That will hamper growth. Strong recoveries in developed countries are also boosting global inflation. Brazil and Russia have been forced to hike interest rates in response, not ideal given that both countries are still fighting Covid-19.
The taper tantrum saw the MSCI Emerging Markets index slump by 10% in four months, says Reshma Kapadia in Barron’s. But “things may not be as bad this time”. The 2013 crisis was amplified by trade and fiscal deficits in many emerging economies. With a few exceptions (notably Turkey and South Africa) most are better prepared for market storms today. Commodity exporters are also enjoying a windfall from the ongoing price rally.
-
8 of the best properties for sale with indoor swimming poolsThe best properties for sale with indoor swimming pools – from an award-winning contemporary house in East Sussex, to a converted barn in Hampshire
-
Chinese stocks slump on first trading day of 2025Chinese stocks suffered in the new year from their worst first day of trading since 2016, despite a state stimulus package
-
Why Wise could be worth a lot more than its share price impliesForeign-exchange transfer service Wise has the potential to become the Amazon of its sector – here's why you should consider buying this stock now
-
How did emerging markets perform in 2024?Emerging markets underperformed their developed counterparts in 2024, but there are signs of recovery. We look at the biggest winners and losers of 2024, and the key trends shaping these markets
-
Can The Gym Group pump up your portfolio?Gym Group was one of the best UK small-cap stocks in 2024 and will beef up your profits this New Year
-
MoneyWeek's five predictions for investors in 2025MoneyWeek's City columnist gazes into his crystal ball and sees five unexpected events in store for investors in 2025
-
How buy-and-build stocks deliver strong returnsBunzl, DCC and Diploma became successful through buy-and-build – rolling up dozens of unglamorous businesses. How does it work and what makes it successful?
-
Singapore Technologies Engineering shows strong growthSingapore Technologies Engineering offers diversification, improving profitability and income
-
South Korean won hits 15-year low – what it means for 'Korea discount'After Yoon Suk Yeol's failure to declare martial law, South Korean markets are reeling, with the weakest won since 2009. Will this worsen the Korea discount?
-
Why emerging markets are waiting for a weak dollarEmerging markets have had a better year but, like everything else, are still lagging far behind the US
