History Shows Emerging Markets Can't Ignore Politics Much Longer
- Markets near records relative to measure of domestic turmoil
- Data shows that on long-term basis, politics influence assets
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Emerging market investors may have become too complacent about political risk.
Stocks, bonds and currencies of developing nations have soared over the past 21 months, despite tremors on the global landscape from Brexit to Donald Trump’s U.S. presidency, not to mention coups and impeachments in their own backyards. Emerging assets are trading at or near record highs relative to a gauge of their political risk, according to data compiled by Bloomberg. There’s a similar trend for inflows into exchange-traded funds.