The implosion of Russia’s financial markets following the country’s invasion of Ukraine is not the first crisis to befall emerging markets. Nor will it be the last.
Since emerging markets were popularised as a collective asset class in the 1980s and 90s, there have been events like the Asian financial crisis, the 1998 Russia debt crisis and Argentina’s serial defaults. The scale of such episodes are a reminder of the risks that come with returns in emerging markets. Investors are notoriously amnesiac but it will be a long time before they regain trust in Russian markets.
Those unfortunate enough to be caught with investments in Russian assets should obviously attract limited sympathy while Ukrainian civilians are being bombarded. But the combination of western sanctions on Russia in response to its aggression and Moscow’s response has severely disrupted Russian markets — including, crucially, sending the rouble spiralling.