Falling emerging markets: do experts think it's time to buy?

It's been a bad start to 2014 as 'Fragile Five' spread contagion, and there could be more gloom to come

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(Image credit: 2008 AFP)

THIS is not how US and European equity markets were supposed to start 2014," says the FT. Emerging market turmoil has dashed "the new year optimism about a recovering global economy and the smooth unwinding of the US Fed stimulus".

What started as a currency rout among the so-called "Fragile Five" (Turkey, Brazil, Indonesia, India and South Africa) has caused stock markets globally to swoon. Before the slight recovery rally later this week, the Dow Jones was down seven per cent, the FTSE 100 had has lost 3.5 per cent, and Japanese stocks had taken a ten per cent pummelling. For many, the contagion danger seemed obvious. "While US and European equities largely shrugged off the 1997 Asian market crisis, global links have since become much closer, increasing potential spillover effects."

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