JPMorgan, BlackRock warn contagion hitting emerging markets

Global trade tension, a strengthening dollar and the prospect of more US interest-rate increases led portfolio flows into emerging markets to slow to $2.2 billion last month

First came the Argentine selloff. Then Turkey. And before long, assets from South Africa to Brazil and Indonesia were getting hit in a selling stampede across emerging markets.

It’s a phenomenon that has a cadre of investors and strategists from JPMorgan Chase & Co to BlackRock Inc reaching for a single word: contagion.

The argument goes like this: while the asset class may offer value over the long haul, investors will sell relatively safe holdings to cover losses in more vulnerable markets or, worse, treat all emerging markets the same and sell indiscriminately. A herd mentality has taken over, meaning