Emerging MARKETS: persistent risks amidst a massive stimulus wave

Over the past months major Emerging Markets have experienced the re surfacing of global, domestic and regional idiosyncratic risks that, beside the current bleak and challenging global economic environment, have weighted on EMs economic outlook and sentiment. Recent evidence on the impact of implemented trade restrictions related to the US-China tariff war shows a slowdown in global trade, investment and manufacturing, pointing to a persistent low growth scenario. On the global scale , the announcement of further monetary easing measures from the ECB and the Fed g a ve some room to EM economies to follow and embark on a rate cut path to support growth. And so has it been: since July and by the end of September sixteen emerging central banks ( and some 11 frontier-market countries) w ill have delivered rate cuts, the largest rate cut wave across EM in a decade. Some events on the domestic and regional scene have emerged to jeopardize anaemic growth prospects : the attacks on major Saudi oil facilities and the heightened tensions between Washington and Tehran that resulted, political unrest in Hong Kong, the consolidation of populist governments across Latin American , are some of the headlines that brought EM domestic and geopolitical tensions to the front line. Following a gradual recovery from May to July, the MSCI EM Index was on a downtrend and below the 1000 level all throughout August to post a recovery in the first three weeks of September. Meanwhile, EM currencies have remained under pressure to further depreciate in Q3-2019. In this piece we offer a short review of the main events that came to animate the EM world late summer.