Markets across emerging economies saw sharp declines Monday as rising geopolitical tensions triggered risk-off sentiment. The MSCI Emerging Markets Index dropped 2.3%, led by losses in Turkey, India, and South Africa. Major currencies including the Turkish lira and South African rand weakened by over 3% against the U.S. dollar.
- MSCI Emerging Markets Index down 2.3% on Monday
- Turkey’s BIST 100 fell 4.1%, India’s Sensex dropped 2.8%
- Turkish lira weakened 3.7% to 38.65 per USD
- South African rand fell 3.2% to 19.48 per USD
- Commodity-linked currencies showed strong correlation to risk sentiment
- Safe-haven assets including U.S. Treasuries saw increased inflows
Global emerging markets posted significant losses Monday amid escalating geopolitical uncertainty. The MSCI Emerging Markets Index fell 2.3% to close at 1,084.6, marking its worst single-day performance since September 2024. Regional indices reflected broad-based sell-offs: India's S&P BSE Sensex declined 2.8%, Turkey’s BIST 100 dropped 4.1%, and South Africa’s JSE Top 40 tumbled 3.5%. Currency markets reacted sharply, with the Turkish lira losing 3.7% against the U.S. dollar, reaching 38.65 per dollar—the weakest level since November 2023. The South African rand weakened 3.2% to 19.48 per dollar, while the Indian rupee fell 1.9% to 83.72. These movements reflect heightened investor aversion to risk, with capital flowing into safe-haven assets including U.S. Treasury bonds and the Japanese yen. Commodity-linked currencies were particularly vulnerable. The Brazilian real dropped 2.4% as oil prices declined on supply concerns, while the Indonesian rupiah lost 2.1% despite strong domestic economic data. Equity markets in Southeast Asia also felt pressure, with Thailand’s SET Index falling 2.6% and Singapore’s STI dropping 1.7%. The broader market response underscores the sensitivity of emerging economies to global geopolitical shifts. With tensions in the Middle East and Eastern Europe remaining unresolved, investors are reassessing exposure to high-volatility markets. The move has prompted central banks in several emerging nations to signal readiness to intervene, though no immediate policy shifts have been announced.