INSUBCONTINENT EXCLUSIVE:
ET Intelligence Group: Factors such as concerns over trade war, rising US bond yields, and uncertainty over economic growth are taking
toll on the emerging markets (EMs)
They have lost nearly $ 2 trillion in market capitalisation since the beginning of the year
EMs with larger share of exports in the gross domestic product (GDP) are facing higher selling pressure given their higher exposure to
global trade amid rising trade wars
Brazil, China, Pakistan, the Philippines, Turkey and the UAE are now in bear grip after they dropped 20 per cent from their recent high
levels.
Benchmark Indian equities have emerged as one of the most resilient in the EM universe with just over 2 per cent fall from the
India has a lower export-GDP ratio of 11 per cent compared with 19 per cent for China and 23 per cent for Russia
The country has also reported rising participation of domestic retail and institutional investors over the past few years
These factors work in favour of Indian equities.
According to technical analysis, a drop of 20 per cent in an index value from the recent
high is perceived as an indication of a bear phase
The combined market capitalisation of the EMs under bear grip is around $8.3 trillion
This means nearly onethird of the total EM market cap of $24.2 trillion is in the bear phase.
Mounting dollar debt is another concern
In a decade, the dollar denominated debt of EMs nearly doubled to $8.3 trillion in 2017
In addition, EMs need to either repay or refinance the dollar debt worth $148 billion and $171 billion in 2018 and 2019, according to
The pressure on EM currencies may exacerbate the situation
The currency index for the developing countries is set for the fifth monthly drop in a row; it has fallen by 10 per cent since January.
