The emerging markets are toughening up. What used to be the sensitive child in the global economy isn’t so sensitive anymore.
Thanks to better policy tools and less dependence on portfolio inflows for funding, the emerging markets are more resilient than ever. Resilient enough, in fact, to not only withstand global monetary tightening, but potentially profit from it.
“From a macro fundamental perspective they’re in a much better position than they have been over the last several years,” says Shamaila Khan, director of AllianceBernstein’s emerging market debt strategies in New York. If synchronized global growth continues, the emerging markets could provide “a really attractive opportunity in sovereign debt as well as local real rates, which are trading at historic highs relative to developed market real rates,” she says.