Emerging Market Stocks Weakness Hits Record Longest Streak... Continuing for 594 Days

MSCI Emerging Markets Index Falls 39% from Last Year's Peak

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Hyunji Kwon] The Morgan Stanley Capital International (MSCI) Emerging Markets Index has set a new record for the longest bear market, due to the strong US dollar and economic uncertainties in China.

According to Bloomberg on the 4th (local time), the MSCI Emerging Markets Index has been in a bear market for 594 days since reaching its peak in February last year. Typically, a stock index is considered to be in a bear market if it falls more than 20% from its peak. This surpasses the previous record of 589 days, which ended in September 2001.

The MSCI Emerging Markets Index is currently about 39% below last year's peak. During the 2008 global financial crisis, the decline reached 66% from the previous high.

Bloomberg predicts that the bear market will continue as the US Federal Reserve (Fed) is likely to maintain its strong dollar policy, leading to ongoing capital outflows from emerging markets.

The bleak economic outlook for China, which holds the largest weight in the MSCI Emerging Markets Index, is also cited as a factor fueling the bear market in emerging market stocks. China is in conflict with the US and other Western countries and is enforcing a strict zero-COVID policy.

John Harrison, Managing Director of Emerging Markets Macro Strategy at TS Lombard, stated, "Emerging markets will continue to face pressure due to the rising value of the dollar and weakness in the US stock market," adding, "If external conditions worsen, capital outflows from emerging markets will inevitably accelerate."

This content was produced with the assistance of AI translation services.