Argentina, Turkey most vulnerable to emerging market risk-aversion

Turkey and Argentina are the emerging market economies most vulnerable to a switch in investor sentiment, Bloomberg reported.

The two countries could be in the firing line should an intensifying trade war between the United States and China turn a global slowdown into a global downturn, Bloomberg said. In that case, a combination of lower exports and capital outflows may push vulnerable emerging markets back to the brink, it said.

Argentina and Turkey are most vulnerable to disruption followed by South Africa and Columbia, Bloomberg said.

Turkey suffers from exchange rate sensitivity, comparatively meagre foreign currency reserves, low economic growth projections and external vulnerability of its banking system, according to an emerging market economy scorecard compiled by Bloomberg.

Meanwhile, Argentina is exposed due to factors including inflation and its short-term external debt, the news and data organisation said.