Emerging markets are enjoying improved fundamentals thanks to corporate earnings improving as economic growth rebounds and strengthening currencies against the U.S. dollar on the back of improved economic outlooks. Investors would do well to not simply focus on the weak dollar or supposedly compelling valuations on emerging markets stocks.
“US interest rate increases were seen as the second-highest risk to Indonesia’s economy and more than half of attendees believed vulnerability to external shocks is the biggest risk facing the country’s credit market,” according to Fitch. “Depreciation in the Indonesian rupiah since the start of the year, while not dramatic, may have contributed to these views.”
The Federal Reserve has raised rates once this year and could proceed with up to three more rate hikes before the end of 2018.
For more information on the developing economies, visit our emerging markets category.