Are currency movements and capital outflows the relevant lever for China problems?

I think all emerging markets are going to be hit by the tightening trend that’s especially developed in the Anglo-Saxon economies (Oz, UK & US).
After all cable at 1.70 is at multi-year highs and currency strength is going to favor GBP & USD especially as there is pressure on higher yields (and restructuring of shorter term interest rates) in US treasuries.
The asynchronous nature of the economy where the flow of capital is beginning to redirect away from emerging markets (and even Japan, the EU & Switzerland) back to the days of the infamous carry trade is invariably going to hurt growing (but inefficient) markets like India, China & Africa.
Risk-return metrics are the basis for good investment and why accept moderately higher yields at substantially higher risk levels.

– See more at: http://marginalrevolution.com/marginalrevolution/2014/06/are-currency-movements-and-capital-outflows-the-relevant-lever-for-china-problems.html#comment-158239633

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