Bernanke Speaks, and Emerging Markets Take a Hit

A few words from Ben Bernanke send investors fleeing and indexes tumbling
Federal Reserve Chairman Ben Bernanke Photograph by Pete Marovich/Bloomberg

Markets the world over have wobbled since Federal Reserve Chairman Ben Bernanke acknowledged to Congress on May 22 that the central bank might slow down its stimulus program. No area has been hit quite like emerging markets. Seven of the 10 worst-performing stock markets since Bernanke’s testimony are based in developing countries. Brazil’s Ibovespa index has lost the most, down 21.6 percent as of June 19, and benchmarks from the Philippines to Greece have posted double-digit declines. The JPMorgan Emerging Markets Bond Index lost 7.4 percent in a little more than a month. Currencies from South Africa’s rand to India’s rupee have hit lows against the dollar. “It’s been a pretty broad beating across the board,” says Paul Christopher, chief international strategist at Wells Fargo Advisors. “The Fed opened Pandora’s box.”

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