为什么新兴市场的股票值得买入(2) So while experts pursuing emerging-markets investment strategies insist they present a buying opportunity , to commonsense civilians and other skeptics , they look and feel like a trap . Who ' s right ?
For the sake of prudence , let ' s start with the considerable risks . These involve understanding this year ' s big selloff and acknowledging that by betting on the likes of China , Mexico , and India ,
investors are embarking on a potentially lucrative but almost certainly bumpy ride . Two principal factors triggered this year ' s drop : shock waves from moves by the Federal Reserve Bank that raised interest rates in the U . S .
and the rise in global trade tensions stoked by the Trump administration . Those factors , in turn , triggered a slowdown in emerging-market growth rates . What ensued was fear of a meltdown that could mirror the Asian debt crisis of 1997.
A funding crisis occurs when companies borrow heavily in dollars , and investors lose confidence in the ability of national governments or leading corporations to cover the interest payments .
The lenders then refuse to refinance the debt , leading to a wave of bankruptcies . That ' s what happened in the late 1990 s . " People read these headlines about countries with big currency problems , and given the disaster of 20 years ago , they get really scared ," says GMO ' s John Thorndike .
Investors can be forgiven their concern , considering that funding crises have already hit Argentina and Turkey . The Fed ' s rate hikes caused the U . S . dollar to spike relative to currencies in the developing world .
Many of those countries have underdeveloped capital markets , so their governments and companies borrow from abroad , frequently in dollars . As the greenback appreciates , they ' re forced to pay a lot more in Indonesian rupiah or Argentine pesos ,
for example , to meet their dollar-denominated interest payments . Central banks then lift their own rates to prevent their currencies from sliding even more , a move that slows their economies ,
further curbing the business and tax revenues needed to repay foreign lenders . Since late 2017 , Mexico , South Korea , Russia , Indonesia , and Turkey have all raised rates , with Turkey going this year from 8% to 24%.
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