Taking stock of EM market performance in previous RMB falls

There have only been three previous occasions in the last decade when the renminbi has depreciated to any meaningful extent against the dollar. On two of those occasions the performance of EM markets was poor. But on the other, it was healthy. This was because the circumstances that gave rise to the renminbi’s decline on that occasion were quite different. The latest decline bears more resemblance to that episode than to the other two. Accordingly, we do not expect EM markets to remain under fire.