Emerging markets could face a feared sudden stop in capital flows as president Donald Trump's 'America First' policies boost the US economy and draw money away from poorer countries, investment bank JP Morgan warned on January 23, according to Reuters. 

Romania and Hungary in the region, but also Malaysia and South Africa, are among the countries most exposed to such development, according to the investment bank.

However, the sudden stop is not related to intrinsic developments of the emerging markets but to a global financial tightening prompted by the expectations for high interest rates to stay higher for a longer period. This means no specific emerging markets are at risk. 

Furthermore, the investment bank argues that most of them are likely to absorb the effects of the potential sudden stop.

JP Morgan's in-house indications show there was USD 19 billion worth of "net capital outflows" from developing economies, not including China, in the last quarter, with another USD10 billion expected to flee in Q1.

iulian@romania-insider.com

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