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JPMorgan, BlackRock warn contagion hitting emerging markets

Global Economy

JPMorgan, BlackRock warn contagion hitting emerging markets

Bloomberg Published on Thu, Sep 06, 2018 / 8:05 AM GMT+8

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SINGAPORE (Sept 6): First came the Argentine selloff. Then Turkey. And before long, assets from South Africa to Brazil and Indonesia were getting hit in a stampede of selling across emerging markets.

It’s a phenomenon that has a cadre of investors and strategists from JPMorgan Chase & Co. to BlackRock Inc. reaching for a single word: contagion.

The argument goes like this: while the asset class may offer value over the long haul, investors will sell relatively safe holdings to cover losses in more vulnerable markets or, worse, treat all emerging markets the same and sell indiscriminately. A herd mentality has taken over, meaning no matter what the relative risks and potential returns are in individual countries, investors who choose to buy run the risk of being trampled.