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Five More Emerging-Market Perils May Lurk After August Shocks

Libyans chant slogans during a demonstration at the Martyrs' Square in Tripoli on Aug. 25.

Source: AFP via Getty Images

For a month that started with Societe Generale SA and Investec warning of the dangers that the vacation season typically presents for emerging markets — falling currencies and volatility — August has gone swimmingly.

Investment flows are recovering, stock-market capitalization is at an all-time high and average spreads on dollar bonds are at their lowest since early March. And that’s despite gyrations in the U.S.-China trade narrative, a fresh bout of market turmoil in Turkey and nationwide protests in Belarus.

But there’s no room for complacency. For one thing, all the above-mentioned risks remain, plus the doggedly solid Covid-19 infection rates across many parts of the developing world.

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