Hullabaloo in the Emerging Markets

Lately there has been a disproportionate amount of attention on the emerging markets. The primary reason for this attention is the recent decline is the EM currencies vs the Dollar led by the spectacular decline in Argentine Peso. The below chart depicts the 1 year performance of a fe EM currencies. The chart does not depict the actual volatility in the currencies which would show that the India Rupee has actually gained back a lot of ground in past few months (2^nd graph below).

Source: Oanda

There are varied views in the market about the views one should have on the emerging markets with some fiercely shoring while others are using this as an opportunity to buy more and increase EM weight in their portfolio.

I believe that it is not correct to club together the emerging markets and analyse them as one distinct asset class simply because of their varied behaviour, economic situation and events to come in the future.   

Below are a few (among a train of articles in recent press) stories/opinions about the same.

Let us wait and watch what happens. 

http://www.economist.com/news/leaders/21595454-there-no-reason-broad-emerging-market-crisis-nervous-investors-could-yet-cause

http://www.project-syndicate.org/commentary/nouriel-roubini-explains-why-many-previously-fast-growing-economies-suddenly-find-themselves-facing-strong-headwinds

http://www.project-syndicate.org/commentary/michael-heise-shows-why-some---but-not-all---emerging-market-currencies-have-come-under-attack-in-recent-weeks

http://www.project-syndicate.org/commentary/kenneth-rogoff-looks-beneath-the-turmoil-roiling-emerging-economies--equity-and-currency-markets

http://www.project-syndicate.org/commentary/dani-rodrik-reviews-the-fundamental-lessons-about-emerging-economies-that-economists-have-refused-to-learn