The emerging market stock index is entering correction territory
A closely watched indicator of emerging market stocks trended into correction territory, marking the height of uncertainty over U.S. trade policy and worries about the outlook for China’s economic growth.
The MSCI EM index closed 0.4 percent lower at a four-month low of 1,066.47 on Thursday. The decline in the indicator since the almost 20-month high in October exceeded the 10 percent mark, the threshold for a correction.
Emerging market stocks came under pressure in the final quarter of 2024 as Donald Trump won the US presidential election and traders worried about the negative impact of his proposed tariffs and other measures on the country’s trading partners.
Chinese stocks have sold off in recent months, not only because of the potential impact of U.S. tariffs but also because Beijing’s stimulus package fell short of investors’ expectations. At over 27 percent, Chinese stocks represent the largest single country weighting in the MSCI EM index.
