Emerging-Market ‘Orthodoxy’ Pivots Find Skeptics on Wall Street
- Recent EM asset rallies may sputter if policy vows fall flat
- Some investors have been burned before by EM reform promises
The exterior of the Egyptian stock exchange is seen in Cairo.
Photographer: Shawn Baldwin/Bloomberg
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A rally triggered by a pivot to market-friendly policies in some key emerging markets is already showing signs of fatigue.
Markets from Egypt and Turkey to Nigeria and Argentina had soared in recent weeks as the promise of normalizing economic policy — currencies were devalued and financial restrictions lifted — buoyed investor sentiment. That enthusiasm is already dimming, however, as some Wall Street veterans offer a grim reminder: Reform agendas often have a way of stalling in developing nations, punishing bulls who buy into the optimism.