(Bloomberg) -- Emerging markets closed on a dismal first quarter, trampled by the impact of Russia's war on Ukraine, rising global inflation and risks such as China's regulatory crackdowns.
The MSCI Inc. gauge of developing shares slumped for a third straight quarter, its worst run since 2018. Dollar bonds from emerging government and companies are down the most since the onset of the pandemic, and 15 of 24 developing currencies tracked by Bloomberg are down this year, led by the Russian ruble.
The “start of 2022 forced many emerging-market investors to re-assess their strategy and positioning,” said Citigroup Global Markets Inc. strategists led by Dirk Willer. “Idiosyncratic risks are not so idiosyncratic anymore with Russia/Ukraine story impacting markets in emerging markets, as well as in developed markets. Inflation is no longer a risk, but a reality.”
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Here's what to watch in emerging markets as March heads toward a close:
- The South African rand, often seen as a proxy for risk sentiment, led losses among EM currencies on Thursday. Still, investors who bet for the nation's assets this quarter have been rewarded with some of the best currency, equity and bond returns in the developing world
- Russia's onshore ruble, which has been buoyed by capital controls, strengthened for a ninth session, edging closer to levels seen before troops invaded Ukraine
- The Brazilian real strengthened versus the dollar, adding to quarterly gains; the currency has advanced the most in the first quarter among 31 major peers tracked by Bloomberg
- Currencies from Chile, Peru, Mexico and Colombia also headed for quarterly gains
- Pakistan Prime Minister Imran Khan said he will face a no-confidence vote on Sunday
©2022 Bloomberg L.P.
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