Talking Point  

Have your say: how are geopolitical tensions disrupting emerging markets?

Have your say: how are geopolitical tensions disrupting emerging markets?
A multi-story house in Kharkiv, Ukraine, destroyed following Russian attack. (Credit: AP Photo/Efrem Lukatsky)

At the start of the year, 2022 was already seen as a somewhat challenging year for emerging markets, owing to a slowdown in global growth, the impact of Covid-19 and inflation.

And now, following the invasion of Ukraine by Russia, emerging markets are set to have an even tougher time.

Emerging markets are often attractive to foreign investors due to the high return on investment they can provide, but they face higher political and economic risk.

Russia and Ukraine account for a large share of global exports of various commodities; namely, oil, precious metals and cereal among others.

With supply interrupted and leading to higher prices, emerging markets, particularly those who import more than they export, face further cost pressures and credit risks.

Additionally, broadly speaking, geopolitical tensions tend to make investors nervous.

So, how are investors reacting?