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Power Play: Falling oil and risks to emerging markets

A worker does a quality control check at the Kimberly-Clark manufacturing facility in Camacari, Brazil.
Paulo Fridman | Bloomberg | Getty Images

Oil continues to fall, with West Texas Intermediate dipping below $45 a barrel.

The free-fall in crude is one of the reasons why a veteran market strategist is cautious about investing in emerging markets.

David Bailin, global head of managed investments at Citi Private Bank, tells CNBC's "Power Lunch" on Wednesday falling petroleum and a Fed-induced rally in the U.S. dollar are two of the biggest risks.

Read More Mobius: Oil's fall is purely sentimental

"We remain underweight emerging market debt in EMEA and Latin America and some share markets with strong petroleum exposures. Given its external vulnerability and potentially economically-harmful political scandals, the Citi Private Bank Global Investment Committee increased its underweight in Brazil," Bailin said.

The bank is reinvesting proceeds in Japanese small-cap shares.

"North Asia's external position is very different from other EMs with current account deficits, though this does not protect them from all external concerns. Given a strong negative correlation to the yen and the country's large petroleum trade deficit, Japanese shares may be a relative beneficiary of higher short-term U.S. rates," Bailin said.

WTI and Brent Crude are down more than one percent during trading.