Turkish President Tayyip Erdogan waving to the crowd during an “anti-terrorism” rally held at Yenikapi Square. AFP PHOTO
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In the summer months, the nastiest shock for investors was undoubtedly the realization that emerging markets posed a potential threat to global growth.Emerging markets (and fund managers specializing in this area) have been the victims of relentless capital outflows and sinking currencies since July.First, emerging markets have always been prone to boom and bust and to policy mistakes.It is striking that even the head of the US Federal Reserve now has to worry about what goes on there -- witness Janet Yellen's recent remarks on China's slowing economy and Chinese policymakers' lack of deftness in handling the markets. That underlines the point that emerging markets are a very loose category. In compiling a taxonomy you might well start by dividing them into China versus the rest. The slowdown of its economy since 2011 and the attempt to rebalance away from an excessive level of investment in gross domestic product has damaged other emerging markets through its impact on oil and commodity markets, and on world trade.You might equally divide emerging markets into rich and poor camps. In other words, cheap external finance, plentiful capital inflows and commodity booms helped hide many shortcomings and fuelled 15 years of emerging-market growth.
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