Emerging markets resemble a kaleidoscope. Every turn brings new issues and considerations into focus, resulting in risk mitigation policies that are heavily influenced by national and local political and micro-economic scenarios.
With a significant market correction in early 2014, investors have become increasingly sensitive to country risks. Countries that experience heightened political uncertainties or do not take timely and decisive measures to address policy weaknesses are most at risk for equity outflows. Economies with large external financing requirements, macro-economic policy gaps and political uncertainties remain most vulnerable.