LONDON - The devaluation of the Mexican peso is causing investors to examine emerging markets more carefully.
But one prominent emerging markets investor has spotted an important criterion to see if markets are vulnerable to runs.
Arnab Banerji, chief investment officer for Foreign & Colonial Emerging Markets Ltd., said emerging markets with high savings rates and relatively low dependence on foreign capital flows will weather market storms better.
Mexico's huge deficit, overvalued currency and high dependence on U.S. capital made the country very vulnerable, he said.
In contrast, countries such as Chile, Brazil and India, with their low dependence on foreign capital, are in a much better position to survive flight of foreign capital, he said.
"Those with a domestic pension fund industry ... and a high savings rate won't get swamped," Mr. Banerji said.