Equity investors in the emerging markets (EM) have suffered significantly as a result of the escalation of the Turkish crisis. But a closer look at the EM index reveals that not all emerging markets are in crisis mode.

The MSCI Emerging Markets Index has fallen 7.2% in US dollar terms since the beginning of the year to the end of August. The crash of the Turkish lira, followed by similar problems with the Argentine peso, has led to heightened fear of contagion. But our research shows that 80% of the index is in countries with positive current accounts, taking into account foreign direct investment (FDI). We include FDI because these investments tend to be stable in the long term and seldom come off quickly, even if a country gets into trouble.