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There is a phrase for it: the soft bigotry of low expectations – the markets’ impulse to dump emerging market assets at the first sign of a crisis.
In the first six weeks of the year, emerging markets felt the full force of traders’ low expectations as the market dramatized the sell-off in equities, FX and rates markets in nations with high current-account deficits. Fears of full-blown and synchronized trouble akin to the Asia crisis of 1997-98 snowballed.
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