Emerging-Market Rebound Depends on China and India
Conditions in both countries look to have deteriroated rapidly in recent weeks.
Narendra Modi and Xi Jinping are watching their financial markets sink.
Photographer: Pool/Getty Images AsiaPacThis year’s sell-off in emerging-markets assets has abated in recent weeks and valuations are tempting, but it’s too soon to say things have bottomed. The key to any rebound is China and India, two economies where the outlook has deteriorated in recent weeks.
The relative size of their economies — together they accounted for more than 25 percent of global output in 2017 — and stock markets — they are the only two developing economies to figure in the top 10 in world market capitalization rankings — make them bellwethers for the entire asset class. China, the world’s largest exporter, has seen its foreign sales threatened by the escalation of tariffs by the U.S., contributing to about a 20 percent drop this year in the CSI 300 Index of equities. India, the world’s third-largest economy measured by gross domestic product based on purchasing power parity, has seen its currency depreciate in the face of mounting costs to import oil.