FT News Briefing Emerging markets: high risk, no reward?
Feb 15, 2022
Tensions are rising between the U.S. and Russia over Ukraine, sparking debates on narrative control. Meanwhile, remittances from U.S. migrant workers are hitting record highs, providing vital support to families in Central America. Investors are becoming increasingly wary of emerging markets, questioning the risks versus rewards. Inflation and local currency challenges further complicate the investment landscape, especially as China's economic shifts reduce growth potential.
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Messaging Wars Over Ukraine
- The US and Russia are engaged in messaging wars over Ukraine, trying to control the narrative.
- Russia might have an advantage due to higher public distrust in Western governments.
Remittance Boom
- Remittances to Central America and Mexico from US migrant workers rose significantly, exceeding 25% in some countries.
- One worker in Kentucky sends a quarter of his $5,000 monthly income, potentially increasing due to Mexican inflation.
Emerging Markets Shift
- Emerging markets, once high-risk, high-reward, may now be high-risk, low-reward due to changing global dynamics.
- Growth has slowed, and investors are hesitant due to pandemic effects and less reliance on imports from China.