Emerging Markets Face a Tsunami of Threats

According to Benoît Anne of Societe Generale, the ongoing repricing of U.S. monetary policy is clearly the most serious risk for the global emerging markets in the period ahead. But a serious growth accident in China is not far behind in terms of a potential risk appetite shock for the Global Emerging Market. To a large extent, the Global Emerging Markets needs an improvement in global growth expectations to prosper. Weaker growth in China would sap global growth expectations, undermining Global Emerging Market assets which are highly leveraged to the global growth outlook. It would also push Emerging Market central banks to accelerate their shift to further policy easing, even in countries where there is no easing bias at present.

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