Given global financial markets are starting to look closely at Emerging Markets for signs of collapse, Over the past week alone, we have heard about some Chinese lenders needing bailouts and we have also seen some banks halt withdrawals. I thought it useful to present this chart. This is a somewhat difficult economic concept for me to explain but I thought this chart did a pretty good job.
There is an economic theory called, "Current Account/Capital Account Parity". Basically, if a country is running a Current Account Deficit, they need to be running a Capital Account (cuffed as Foreign Reserves here) Surplus of the opposite amount so that the two are at Parity.
So which Emerging Economies are in the most trouble? Look at the bottom left of the chart and you will find Turkey, South Africa, India and Indonesia. Argentina doesn't even show up on the chart so it looks to be the worst of all. Korea, Russia, China and even Brazil don't look to be in as bad a shape.
It might be worth watching some market indicators on these 4 or 5 sovereigns for further signs of stress. 5yr Credit Default swaps would be something to watch as well as their sovereign yields.