The markets are trying to price in the first interest rate rise by the Federal Reserve in nine years, and as shown by recent volatility, it is not an easy task.
There has been a marked change in sentiment towards emerging markets this year, with more investors getting back in after disappointing performance last year.
But three analysts published warnings about the asset class on Monday. While not calling for an abrupt end to the rises in emerging markets stocks and bonds witnessed over the past few months, the warnings serve as a reminder that volatility can come back at any time.
Capitulation in emerging markets is getting close, a survey of fund managers with $653 billion assets under management suggests.
Emerging markets have quickly caught the developed nations’ disease and now many of them suffer from too rapid credit growth, which threatens their financial stability, analysts at Societe Generale said in a report.
In several countries, credit growth has exceeded 15 percent per year over the past four years, outpacing gross domestic product growth.
Asian manufacturing data show that the recovery is gaining strength, with most figures rising.
China’s HSBC final Purchasing Managers’ Index (PMI) showed the strongest improvement in operating conditions in seven months, rising to 50.9 in October from September’s 50.2, data from Markit showed on Friday.