Brazil Chile Colombia Mexico Peru Czech Republic Egypt Hungary Morocco Poland Russia S. Africa Turkey Europe, Middle East, Africa China India Indonesia Korea Malaysia Philippines Taiwan Thailand Asia Source: Bloomberg So, a rise in the Index implies an increase in the production of food, electricity, housing, and steel, and points to future global economic growth. As shown in the above chart, the BDI has doubled since early August and tripled year to date. A big slowdown in global economic activity doesn’t seem to be in the cards. A Good Story The facts, however, seldom present an obstacle that a good media story can’t overcome. Such was the case with the media-induced, emerging-market selloff ahead of the Fed’s anticipated “taper” announcement. The story—or at least a chapter from it—went something like this: Emerging markets are carrying big current account deficits… any twist of the Fed’s liquidity spigot will slow the flow of Western capital into emerging economies and aggravate the deficits… a rise in interest rates would ensue… higher rates will slow economic growth… better to sell emerging markets and their currencies ahead of these events. The sand in the ointment that lubricated the media jaws is that “emerging markets” is not a homogenized thing, but an array of countries with distinct economic and fiscal profiles. For a real-world perspective, let’s look at the 21 emerging markets as defined by the MSCI Market Index. Here they are, sorted by region, with countries that run a current account deficit shown in red, and those with a surplus shown in green: The skies were clear as we started final approach into Changi International Airport. Still several kilometers out in the Singapore Strait, dozens of container ships sat idle, tethered to the seabed, and seemed to stretch clear to Batam Island, part of the Indonesian archipelago. Each ship formed part of a nautical queue and waited its turn for cargo to be transshipped or offloaded at Singapore’s port terminals. Singapore is the world’s second-busiest port in terms of cargo tonnage, and number one for the transshipment of cargo. This volume of traffic and trade has turned the Singapore Strait into a major link in one of the world’s most strategic shipping lanes that connects the South China Sea with the Strait of Malacca, and all destinations west. The above anecdotal observation from my window seat aligns with recent action in the Baltic Dry Index (BDI). The BDI is an indirect measure of global supply and demand for shipping capacity. The index acts as a leading indicator in that it measures the demand for “dry” commodities (grain, coal, timber, ores) that are the raw materials used in intermediate and finished-goods manufacture. America’s Hmmm… I see a pattern here. The farther east you look, the greener it gets. It’s pretty obvious that most Asian markets were smeared as card-carrying members of the current-account-deficit club, a grossly inaccurate generalization. Indonesia, by the way, hiked interest rates in early September and revised its GDP estimate for 2013 lower to 6%, a growth rate that countries in the left and center columns of the table are yearning to achieve. Without Us, You’re Toast In 1965, Singapore, following a decade of strife to attain self-rule, became an independent nation. The thumb of British colonial occupation was lifted. The prognosis from the foreign press was immediate and unequivocal: Singapore was doomed. The only question was when. Britain had agreed to maintain its military bases in the country, the primary source of security and economic support for the fledgling country. The bases were a hundred-million-pound burden on the British treasury—closure was inevitable. A British withdrawal from Singapore was compared to the decline of the Roman Empire, where law and order collapsed as the Roman legions retreated and barbarians filled the vacuum. The latest round of emerging-market skepticism, concocted and perpetuated by an ill-informed Western media, embodies the nauseating ideal of Anglo-exceptionalism and is reminiscent of the “you can’t make it without us” conceit of the 20th century. Singapore is not an emerging market, of course, but it was, having clawed its way from backwater trading post in the hinterlands of the British Empire to today’s economic and financial powerhouse. Other Asian nations are following the path it trod, and intra-emerging-market export trends and demographics suggest that the region’s growth story is far from over.