Asia Minute: Asian Emerging Markets Remain Vulnerable
Stock market volatility is continuing around the world today. While investors are making different judgments about various markets, in Asia there’s a particular concern about one category. HPR’s Bill Dorman has more in today’s Asia Minute.
These are challenging days for emerging markets in Asia.
It’s a broad category… a step down from so-called “developed markets.” Membership is not exactly formal, in fact some investors consider all markets in Asia except Japan to be emerging. A more common view excludes Hong Kong and Singapore, as well as Australia and New Zealand, which make up the “Pacific” part of “Asia Pacific Markets.”
Morgan Stanley Capital International tracks eight economies in its Emerging Markets Asia Index. They start with China and India, add Indonesia, Malaysia, the Philippines and Thailand as well as two economies that some consider to be developed, South Korea and Taiwan. Each economy faces its own challenges, but some western fund managers lump them together as a single asset class treating them as a single unit when faced with an event such as economic developments in China.
It’s true that many emerging economies in Asia export heavily to China, and also compete with China when selling to other markets. That’s been a double whammy with China’s recent currency devaluation, making their currencies vulnerable along with their stock markets. But the biggest threat hovering over emerging economies in Asia remains a four-letter word that may sound especially nasty to some these days: Risk.