Under the dual pressure of tariffs and a strong dollar, emerging market stock markets face a massive sell-off

As the potential tariff policies of Trump approach, combined with the strong performance of the dollar, emerging markets are experiencing a "sell-off." On Wednesday, most Asia-Pacific markets fell, with the Nikkei 225 index declining for the fifth consecutive day, and the South Korean Composite Index slightly lower, while the dollar and gold rose. Investors are concerned that under Trump's possible tariff and inflation policies, the uncertainty of the Federal Reserve's interest rate cut cycle increases, and countries may devalue their currencies to enhance export competitiveness, which will suppress the dollar returns of emerging markets. Emre Akcakmak, portfolio advisor at East Capital, stated: "Clearly, with rising U.S. yields and a stronger dollar, this is very unfavorable for the performance of emerging markets." Emerging Market Stocks Face Sell-Off According to the MSCI Emerging Markets Index data, since reaching a two-and-a-half-year high on October 2, the index has fallen over 10%, tracking approximately $7.6 trillion in stocks from markets such as India, Brazil, and South Africa. In contrast, developed market stocks have remained nearly flat during the same period. Key players in emerging markets, such as India and South Korea, have seen significant declines in recent months. Emre Akcakmak from East Capital stated: "The major markets that make up two-thirds of the MSCI index are all under pressure." According to JP Morgan, year-to-date, global emerging market equity funds have seen outflows of about $3 billion, compared to $31 billion last year. Persistently high interest rates and a strong dollar typically attract U.S. investors to stay domestic rather than risk investing overseas. Investors generally expect that countries may devalue their currencies in response to U.S. tariffs to enhance export competitiveness, which will further suppress the dollar returns of emerging markets. Analysts: Panic May Present Buying Opportunities There is a widespread belief in the market that protectionism will intensify, with Archie Hart, portfolio manager at Ninety One, stating: "'America First' policies have become a consensus." Nevertheless, he added that the market has already priced in the tension in trade relations for the coming years. Some investors are preparing for a rebound amid the sell-off of emerging market assets in the first half of the year, believing that initial tariffs may be higher than Wall Street's consensus, followed by a reduction after Trump reaches deals with various countries. Kristina Hooper, Chief Global Market Strategist at Invesco, pointed out: "What we are seeing now is a very emotional and irrational reaction, which historically tends to create buying opportunities." Risk Warning and Disclaimer Markets are risky, and investments should be made cautiously. This article does not constitute personal investment advice and does not take into account the specific investment goals, financial situation, or needs of individual users. Users should consider whether any opinions, views, or conclusions in this article are suitable for their specific circumstances. Investing based on this is at one's own risk