Emerging markets bear brunt of terror concerns following Paris attack

Emerging markets bore the brunt of a clamour for safety as Europe’s worst terror attack in more than a decade exacerbated a sell-off driven by deteriorating global economic growth and looming US interest-rate increases.

A gauge of 20 developing-nation currencies, the MSCI Emerging Markets Index, fell to the lowest level since late September.

Asian air carriers tumbled on speculation that tourists will cut back on travel to Europe, while Turkish Airlines fell 2.6% in Istanbul.

Concern deepened that geopolitical tension will curb trade and slow global growth after at least 129 people were killed across Paris on Friday.

The violence came at a time when China’s slowdown has curbed the outlook for trade flows, while speculation that the Federal Reserve will start raising rates in December is undercutting the appeal of riskier assets.

“Investors are worried about the growth outlook in emerging markets, especially if the Fed starts tightening rates this year,” said Michael Wang, a strategist at hedge fund Amiya Capital in London.

“This is being compounded by the terrorist attacks over the weekend. It’s a risk-off day for equities due to the Paris attacks.”

Investors pulled $1.06bn (€983m) out of US exchange-traded funds that buy emerging-market stocks and bonds in the third straight week of outflows.