Talking Points:
• The IMF, World Bank and other global bodies have included Emerging Market troubles as one of the key risks ahead
• Global investors have increased exposure to EM assets for higher return, creating a speculative imbalance
• More than just a risk exposure; EM cross point to global growth, Fed rates and other risk catalysts
What are the Traits of Successful Traders? See what our studies have found to be the most common pitfalls of retail FX traders.
Emerging markets are one of the more frequently mentioned risk-exposed segments in the financial system, but why? In the speculative build-up from 2009 to this year, capital was chasing the fastest rates of return and underlying growth. The rapid growth and concentrated economic focus of these regions ensured their place in the high-return column. However, more than just one of the asset groups that accompany high-yield corporate debt, speculative commodities and carry trade in the far-end of the risk-spectrum; this asset class represents an intesection of many underlying considerations for speculative positioning and capital preservation. For example, Emerging Market growth has been responsible for most dramatic rates of global expansion since the Great Financial Crisis, and accommodative monetary policy lead by the Fed (and thereby put in jeopardy by the group) has seen a financing build up in EM productivity. We look at this top three risks to the global market in today's Strategy Video.
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