Economics

Why Asia Will Come Out on Top as Emerging Markets Get Shaken Up

  • Macquarie’s Nizam makes comparison to mid-1990s Tequila crisis
  • Asia has higher growth forecast, lower inflation outlook

Oppenheimer's Memani Says China Could Provide Boom for EM

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The turbulence seen across emerging markets is following a similar pattern to a crisis that rocked global trading more than two decades ago -- it involved tequila.

In the mid-1990s, U.S. interest-rate increases helped spark a Mexican peso devaluation that fueled capital flight and caused the so-called Tequila crisis. Within a few years, the sell-off had spread to Asia, which became the center stage of the emerging-market crisis, during which currencies were devalued as the region was sent into an economic tailspin. Fast forward to 2018, and history is repeating itself, with a crisis brewing in Latin America as Argentina seeks emergency funding just as the dollar and U.S. bond yields spike.