By Adam Hurwitz
As the world becomes smaller,
certain emerging markets are poised to become the new hubs of
international finance. The Economist, however, seems to think this shift may be delayed due to
volatility and uncertainty in these burgeoning economies. The MSCI EM stock
index, which includes stocks from across the developing world, dropped 3.2%
this week and losses in equities and currencies in these markets have reached
what some have deemed, “crisis proportions.” Two main explanations are given
for this collapse. First, financial issues in China have caused a decreased
demand for raw materials causing a drop-off in international trade.
Additionally, anticipated interest rate hikes in the U.S. and Britain has
investors scared pulling around $44 billion out of emergent-market equities and
bonds. Whether or not this will put these markets into financial crises,
however, remains to be seen.
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