• The role of the Russian economy in the emerging markets has been diminishing since the 2014 sanctions were applied following the annexation of the Crimean Peninsula. Despite a recovery in 2021, Russia’s share in the global economy is now in further decline as the financial impacts of the Russia-Ukraine war are priced into global markets.
• Offloading Russia from global market indices has not brought dramatic changes to weight allocation in the top four emerging markets (Mainland China, Taiwan, South Korea and India).
• Russia’s decline has made Brazil the largest mover in 2022; however, high volatility could hinder further expansion of investment into Brazil’s equity market.
• China was already facing an economic slowdown in 2021. The new economic sanctions, imposed on Russia in reaction to the Ukraine invasion, are expected to bring extra turbulence to China’s economy.