Why the sell-off in emerging markets will only get worse

Emerging market stocks are sinking, and one portfolio manager is urging more caution.

Chad Morganlander, portfolio manager at Washington Crossing Advisors, told CNBC's "Trading Nation" that emerging markets could fall further. Here's why.

• One large emerging markets-tracking ETF, the EEM, has fallen 1.5 percent this year amid a gradually strengthening U.S. dollar and concerns around trade skirmishes escalating between the U.S. and its trade partners. The ETF is down nearly 11 percent from its year-to-date high hit in late January.

• As China attempts to decelerate its credit growth, the process may have an overall dampening effect on global growth, but particularly across emerging markets.

• The dollar is also a concern in this arena. As the Federal Reserve hikes interest rates going into the rest of the year, "value" firms in the U.S. over growth company will likely benefit, while emerging markets will feel the pain as the dollar gradually grinds higher against foreign currencies.

Bottom line: Emerging markets may feel further pain as the U.S. dollar gains, and it would be prudent to go underweight the asset class, one portfolio manager argues.

Vote to see results
Total Votes:

Not a Scientific Survey. Results may not total 100% due to rounding.


Trades to Watch

Trader Bios


Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Sara Eisen

Sara Eisen joined CNBC in December 2013 as a correspondent, focusing on the global consumer. She is co-anchor of the 10AM ET hour of CNBC's "Squawk on the Street" (M-F, 9AM-11AM ET), broadcast from Post 9 at the New York Stock Exchange.

In March 2018, Eisen was named co-anchor of CNBC's "Power Lunch" (M-F, 1PM-3PM ET), which broadcasts from CNBC Global Headquarters in Englewood Cliffs, N.J.

Read more