EM

Question 1

What happened in 2017 with emerging markets?

Answer 1

In 2017, with interest rates for the major developed economies ultralow or negative, many investors were desperate to find yield. They often piled in whenever a developing country’s bonds or currencies fell because of perceived political or economic risk.

Question 2

What happened in Brazil last year?

Answer 2

After Brazilian stocks tumbled 10% in one day last year on news that the country’s president was under investigation in a corruption scandal, it didn’t take long for investors to jump in. Flows into Brazilian equity funds surged to their highest level in five years the next week. The currency and stocks made up those losses in the following months.

Question 3

What happened to the US yields now?

Answer 3

Now, higher yields in the U.S. have diminished the attractiveness of emerging-market debt, where investors often assume increased risk to receive a bigger payout. Growing tension over a trade war between the U.S. and other major economies could hit many of the trade dependent emerging-market countries.