Greece, China and the spillovers to EMs

Recent events in China and Greece have generated plenty of gloomy headlines about the spillovers to emerging markets but so far the reaction in EM markets has been relatively limited. One reason could be that lots of bad news has already been priced into markets across the emerging world. But another is that, so long as China avoids a hard landing (as we expect) and problems in Greece do not trigger wider financial stress in the euro-zone (also our view), neither pose a systemic threat to EMs.