Forget fears of a U.S. interest rate hike, the current emerging market selloff has a new narrative, according to one analyst.
"[Tuesday's market selloff] in Asia has a lot more to do with broader global disinflationary fears," than with the Federal Open Market Committee (FOMC), Adarsh Sinha, head of Asia Pacific G-10 FX strategy at Bank of America Merrill Lynch, told CNBC.
"Nowhere is that more evident than inflation break evens across the developed markets," he said, referring to soft growth in European consumer prices and Japanese inflation hitting a one-year low in October.
MSCI's Emerging Markets Index fell to new 10-month low on Tuesday, with Thailand's benchmark index once again leading declines in Asia. The SET index traded at six-month lows for the second straight session, down 3 percent by the afternoon after sinking as much as 9 percent on Monday.
Other experts said Sinha's argument wasn't groundless with lower oil prices driving global disinflation. Crude prices fell to new five-year lows on Tuesday, with Brent crude down 45 percent year-to-date.
"It looks like a valuation trade. The biggest reason for the EM rout is volatility spiking higher, triggered by oil and now ballooned into a broader equity market selloff," said Vishnu Varathan, senior economist at Mizuho Bank.
"It's difficult to isolate and eliminate factors, there are no convenient attributions. You have EM carry trades coming off as long bets are unwound, while year-end dollar demand is also playing a role," he added.