(May 2): A widespread sell-off in China is rippling through emerging markets, threatening to snuff out growth and drag down everything from stocks to currencies and bonds. That’s pushing them to sell not just China’s currency, bonds and stocks but the assets of any developing nation which relies heavily on trade with the second-biggest economy. The MSCI Emerging Markets Currency Index, with almost a 30% weight for the Chinese currency, tumbled in tandem. “If China’s economy slows significantly, emerging markets currencies as well as the yuan could experience a period of elevated and persistent volatility,” said Brendan McKenna, a currency strategist at Wells Fargo Securities in New York. Money managers quickly moved to downgrade their currency outlook for emerging markets.
