In Brazil, the real currency has depreciated for five-straight years while the equity benchmark has declined for three years, the longest extended falloff in a decade.

The Brazilian equities market weakened as the government struggles to support up its finances amid political problems and efforts to oust President Dilma Rousseff. Meanwhile, the economy is suffering through its worst contraction in a century, with interest rates are at their highest since 2006. Mobius believes policy changes like tax and labor reforms will be needed to sustain an economic recovery.

“Global growth concerns and heightened volatility have led market participants to push out expectations for Fed rate hikes, supporting flows into emerging market bond markets. The last time we saw a downward shift of this magnitude was January 2015, when there were inflows of $32 billion to emerging market bonds, compared to just $900 million this month,” said the International Institute of Finance in a note posted by Barron’s.

iShares MSCI Emerging Markets ETF

Tom Lydon’s clients own shares of EEM.