The Brexit vote is a game-changer for EM. While the direct impact on EM is limited, the damage to market sentiment is undeniable. In addition, to make matters worse, there will be a protracted period of uncertainty as the UK and the EU negotiate the divorce proceedings.
We do not think individual country stories will matter much in this new investment climate, where risk assets are likely to remain under broad-based selling pressures. We believe that Asia will outperform, while Latam and EMEA are likely to underperform.