Emerging markets stock index enters correction territory

A closely watched gauge of emerging market stocks tipped into correction territory, the culmination of uncertainty over U.S. trade policies and concerns about China’s economic growth prospects.

The MSCI EM index closed down 0.4 percent on Thursday, hitting a four-month low of 1,066.47. That took the indicator’s decline from October’s nearly 20-month high to more than 10 percent, the threshold for a correction.

Emerging market stocks came under pressure in the final quarter of 2024 as Donald Trump won the US presidential election and traders worried about the adverse effect tariffs and other proposed policies could have on the country’s trading partners. .

Chinese stocks have sold off in recent months not only because of the potential impact of U.S. tariffs but also because Beijing’s economic stimulus package fell short of investor expectations. At more than 27 percent, Chinese stocks represent the largest single-country weighting in the MSCI EM index.