Following the Federal Reserve’s highly-anticipated decision to scale back its extraordinary monetary stimulus, should investors brace for another exodus of funds out of emerging markets?
According to strategists, while emerging markets are unlikely to suffer a repeat of the huge outflows seen earlier this year, given policymakers have acted to address economic imbalances, countries running big current account deficits such as India and Indonesia remain vulnerable.
“In our view, there is still a risk that I wouldn’t take off the table. We expect the impact to the smaller and more targeted with much more focus on countries running substantial current account deficits,” Manpreet Gill, head of fixed income currencies and commodities (FICC) investment strategy, Standard Chartered Bank told CNBC.
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