EMs have found themselves in favor again after a wobbly 2015. For the week ending July 15, EMs attracted the strongest level of portfolio inflows since September 2013, the Institute of International Finance (IIF) noted on Wednesday. Financial institutions, including BlackRock and Bank of America Merrill Lynch, have struck a bullish note on EM equity and credit markets, citing the sector's high yields and support from easy monetary policy.
But that resilience may not last long.
Moody's warned on Thursday that debt is now growing faster than gross domestic product (GDP) for many EM economies, making them vulnerable to external shocks.
"Total emerging and frontier market external debt—defined as debt owed by residents of a country to non-residents—has almost tripled from $3 trillion in 2005 to $8.2 trillion at the end of 2015."
Asia emerging markets lead debt growth globally, Moody's warns
But that resilience may not last long.
Moody's warned on Thursday that debt is now growing faster than gross domestic product (GDP) for many EM economies, making them vulnerable to external shocks.
"Total emerging and frontier market external debt—defined as debt owed by residents of a country to non-residents—has almost tripled from $3 trillion in 2005 to $8.2 trillion at the end of 2015."