Emerging market rout takes aim at India

India became the latest epicentre of the nervousness sweeping risky assets as stocks, bonds and the rupee fell. Goldman Sachs Group says emerging-market currencies, which dropped all but one day this month, are undervalued, while Nomura Holdings Inc. warns investors not to lump all developing nations together.

The rupee sank as much as 1.3 per cent, while stocks dropped the most since March and bonds fell to the lowest level since 2014.

Turkey’s lira also weakened, pushing the benchmark MSCI index of currencies close to dropping below its 200-week moving average for the first time since early 2017.

South Africa’s rand bucked the retreat, extending its advance to a third day.

Though India’s currentaccount deficit was narrower than expected, the fact that it widened at all rattled traders.

The government has asked the central bank to bolster efforts to support the rupee, Asia’s worstperforming currency of the past month,sources said.

Unsustainable deficits

Investors are concerned about countries with unsustainable current-account and fiscal deficits as well as accelerating inflation and higher-than-average foreign ownership of domestic debt, according to State Street Global Advisors.

These are the markets that are “more prone to global mood swings,” said Abhishek Kumar, the London-based sector head for emerging markets, fixed-income beta.

The world’s developing economies have been reeling this year from a combination of escalating trade tensions, the gradual end of central-bank policy accommodation and a raft of idiosyncratic risks.