What are the new tail risks in EM countries?

Need to be discerning

Taken as a group, emerging markets (EM) are continuing to come of age, thanks to strengthening fundamentals and a reduced reliance on external dynamics. The ongoing gradual rise in commodity prices is providing a further boost, but the universe is arguably becoming increasingly diverse.

The investment case for EM equities remains intact, thanks to its positive global growth beta and valuation advantage.  Second on our list of preferences is emerging local currency debt, aided by currency valuations (below fair value), real rates (which remain high) and bond valuations (at a discount versus other segments of the EM bond market).  In third place is hard currency debt, where we see the current tight spreads as vulnerable to the higher rates environment. Jupiter's Teverson: How we capture value in emerging markets But as the emerging world's growth model continues ...