“Emerging Market weakness is widespread and after a long period of resilience is starting to impact credit markets,” said Morgan Stanley’s Rashique Rahman.
And there doesn’t appear to be one sudden event to blame.
“There is no single proximate cause, in our view, rather the cumulative impact of a number of events has led to a deterioration in risk sentiment,” added Rahman. “Growing concern over China’s macro trajectory and uncertainty over credit risk in China’s trust and wealth management products are probably the main drivers, but contributing factors to the spillover into other markets include Turkey’s ongoing currency volatility and political concerns, weakness of Ukrainian credit markets and the ARS devaluation.”
Rahman offered this five-day bar chart of the major emerging market currencies agains the U.S. dollar and the euro.
To the far right is the Argentine peso (ARS), which fell over 13% against the dollar on Thursday.