For much of the year emerging markets have continued to enjoy strong growth, and in 2007 the MSCI Emerging Markets Index rose by nearly 40%. Underlying structural change in many developing economies and huge increases in commodities prices have continued to buoy sentiment toward emerging markets, and many investors have seen them as a safe-haven investment. But in recent months the outlook for many emerging markets has become more pessimistic. Many commodities are down sharply from their peaks. Shares have slumped, with the MSCI emerging markets index down more than 20% since the beginning of the year and the largest markets, such as China (down more than 50% this year) and India (down almost 40%), sharply lower. Standard Chartered has been consistently pessimistic about the prospects in Western economies-and relatively optimistic about those in emerging economies-since the beginning of 2007. It never bought into the idea of decoupling.
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