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Could the EM slowdown trigger a repeat of the Asian financial crisis of the late 1990s? We believe most EM countries are able to weather a reversal of foreign investment inflows without facing major issues. As the above chart on the left shows, many EM countries in 1997 were highly dependent on foreign flows for their funding.  Today, there are only a handful of countries in that category, with only Turkey looking particularly vulnerable. Another key difference: in the 1990s, EM governments were committed to defending unsustainable fixed exchange rates, and their inability to do so sparked a major crisis in emerging markets. Today, in contrast, nearly all EM currencies are free floating. Even those countries facing significant pressure are allowing their currencies to weaken in the face of outflows, which helps bring their external accounts back into balance. In the view of Richard Titherington, Chief Investment Officer of the Emerging Market Equity Team, a crisis in emerging markets is unlikely this time around, and current valuations support adding to EM exposure.