Emerging markets have been fairly resilient since the brief panic that started in late January but the game is surely up.
International investors bought into these markets in the wake of the global financial crisis when they were the only source of growth in a stagnant world economy. Yields in developed markets had been squashed to zero to stimulate economic activity, while emerging markets were still offering solid returns based on relatively sound fundamentals. The trade was a no-brainer buy EM equity and debt.
Needless to say, banks and companies from Argentina to Vietnam have been happy to oblige by borrowing at least $1.5 trillion in external...
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