For much of January it appeared as if markets were headed for a positive start to 2014. However, data that showed manufacturing activity in China and the US weakened in January, renewed attention on the US Federal Reserve’s tapering program and general concerns over emerging markets precipitated a succession of sell-offs in the final third of the month. Symptomatic of the market turbulence in emerging markets, Brazil’s central bank raised interest rates for a 7th consecutive month. The central banks of India and South Africa followed suit, unexpectedly increasing rates in an effort to defend their currencies and guard against the resulting inflationary pressures. The central bank of Turkey went furthest, calling an emergency meeting and announcing a 4.25% increase in its overnight lending rate.
