Investors are rapidly divesting from emerging market equities as they brace for President-elect Donald Trump’s proposed trade tariffs and grapple with a strengthening US dollar and rising bond yields, according to a report by the Financial Times (FT).

The MSCI Emerging Markets Index, which tracks approximately $7.6 trillion worth of stocks in China, India, Brazil, South Africa, and other markets, has fallen more than 10% since reaching a two-and-a-half-year high on October 2. During the same period, developed market stocks have remained relatively stable.

Emerging markets have been particularly impacted by forecasts suggesting that inflationary policies under the Trump administration, such as tariffs and tax cuts, will compel the Federal Reserve to maintain higher interest rates for longer than previously anticipated. This comes amid an already robust US economy.

In recent weeks, US government bond yields have risen as investors reassess the inflation outlook. Emre Akçakmak, a portfolio advisor at East Capital, an emerging markets fund manager, noted, “With US yields rising and the US dollar strengthening, it’s clear that this is not an environment conducive to emerging market performance. The major markets that constitute two-thirds of the MSCI index are all under pressure.”

Chinese stocks, which represent the largest share of the index, have declined by 15% since October 2 due to concerns about the resilience of the country’s economy. Similarly, India and South Korea, two other major players in emerging markets, have also suffered significant losses in recent months.

According to JPMorgan data, investors have withdrawn approximately 3 billion dollars from global emerging market equity funds this year. This adds to the 31 billion dollars in outflows recorded in the previous year.

Prolonged periods of high US interest rates and a strong dollar often discourage US investors from taking on additional risks by investing abroad, prompting them to focus on domestic opportunities instead.

Many investors anticipate that countries affected by US tariffs may attempt to weaken their currencies to enhance the competitiveness of their exports, which could further reduce dollar earnings in emerging markets.

Some investors are positioning for a potential sell-off in emerging market assets during the first half of the year, followed by a recovery. They argue that tariffs may initially be set higher than Wall Street’s consensus but could be reduced as Trump negotiates deals with individual countries.

However, some remain hesitant to return to emerging markets, as doing so would require significant exposure to Chinese equities unless they are held outside of indices that could overshadow movements in other countries.

The Polish government adopted a resolution on Thursday ensuring that Israeli leaders, including Prime Minister Benjamin Netanyahu, indicted by the International Criminal Court (ICC), can “freely and safely” attend the 80th anniversary of the liberation of Auschwitz on 27 January.

On 21 November 2024, the ICC issued an arrest warrant against Netanyahu and others, accusing them of crimes against humanity in connection with the 15-month war in Gaza. This means that ICC member states, such as Poland, are obliged to arrest them upon entry into their territory.

In a political decision that directly contradicts its ICC obligations, the government, led by Prime Minister Donald Tusk, stated it would allow Israeli leaders to attend the event safely, citing its significance as “part of the commemoration of the millions of Jewish victims of the Holocaust.”

The decision also seems to be a concession to President Andrzej Duda, aligned with the conservative Law and Justice (PiS) party. Duda sent an official letter to Tusk demanding that Israeli leaders be granted safe passage.

Poland’s traditional pro-Israel stance remains one of the few areas of consensus among politicians from major parties.

However, the issue may become irrelevant, as Israeli media reported that Netanyahu had not received an invitation. Additionally, the Polish Foreign Ministry informed Euractiv Poland that it had no information suggesting Netanyahu would attend. The ministry also dismissed allegations that Netanyahu could be arrested upon entering Poland as “fake news” propagated by U.S. media.

The Auschwitz-Birkenau camp, operated by Nazi Germany in occupied Poland, was liberated by the Red Army on 27 January 1945 during the Vistula-Oder Offensive. An estimated 1 million people were killed in the camp as part of the “Final Solution.”

The Armenian government has approved the draft law on “launching the process of accession of the Republic of Armenia to the European Union (EU).” According to News.am, the process has officially begun.

Armenian Foreign Minister Ararat Mirzoyan announced that the draft law on the EU accession process was submitted to the National Assembly for consideration. Mirzoyan added that the relations between his country and the EU have been “quite intense and dynamic” in recent years.

“The EU has provided strong political support to Armenian democracy on various occasions. The EU has also played an active role in ensuring security in the neighborhood of the Republic of Armenia,” Mirzoyan said.

On the other hand, Prime Minister Nikol Pashinyan stated that Armenia’s EU membership can only be realized after a referendum.

“In the autumn of 2023, I made a speech in the European Parliament, the main message of which was that Armenia is ready to be with the EU, to be as close as the EU sees fit. At that time, this very speech became the most popular topic in Armenia. The reaction of Armenian citizens to this speech was unprecedented,” he said.

The Prime Minister recalled that this was followed by a trilateral meeting between Armenia, the U.S., and the EU on April 5, 2024, at the suggestion of the EU, which had a “wide resonance.” According to the procedure established by the Constitution of Armenia, a civil initiative was formed, which took legal action by collecting 50,000 signatures.

Pashinyan also emphasized that if this law is adopted, “we should have a clear understanding of the steps to be taken, including whether to hold a referendum or not.”

“As far as I understand, after the adoption of this law, we should discuss with the EU the roadmap they will present and the roadmap we will present, and we should create a roadmap together,” the Prime Minister said.

In March last year, Pashinyan, while evaluating the European Parliament’s resolution on strengthening relations with Yerevan, stated that the Armenian government was determined to deepen relations with the EU.

At the end of June, Alen Simonyan, the Speaker of the Armenian National Assembly, stated in an interview with LSM.lv television that Armenia may organize a referendum on EU accession in the near future. Simonyan emphasized that Armenian society had made up its mind on joining the EU.