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The Street View

Macro Forum insights and perspectives June 2018

01 June 2018
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By now Emerging Market investors know that weakening currencies spell danger for returns. Bouts of extreme global volatility such as those which swept through the asset class in 1997, 2001 and 2008 had enormous impact on economies, businesses and capital markets. More regional crises such as that set off by the commodity slump in 2014-16 have similar effects on specific areas. And self-imposed wounds brought on by domestic policy mishap or political events (think Turkey and Argentina in recent months) have very specific country impacts.

The reasons vary by country but have one central theme, the vulnerability of countries which rely on portfolio flows to plug financing gaps left by shallow domestic financial systems. Whilst this has been the case for decades, the bulls argue that distinct regional and country differences exist which require closer examination.

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