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Noah Smith

The Story Behind the Emerging-Market Meltdown

In a word, China.
A window onto China's woes.

A window onto China's woes.

Photographer: Stephen Shaver/AFP/Getty Images

If you invest, you may have noticed that emerging-market stocks have done badly of late. The MSCI Emerging Markets Index, which did so well in the early 2000s, has been almost unchanged since the global financial crisis. Since this spring, though, the index has tanked:

Underperformance for emerging-market shares has been accompanied by discouraging economic data. Brazil's economy has been shrinking in the past year. So has Russia's. Economies such as those of Indonesia and Turkey have slowed. And China, the granddaddy of all emerging markets, is entering a sharp slowdown after the deflating of its housing and stock-market bubbles.