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.

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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.

Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's “Closing Bell (M-F, 3PM-5PM ET).   In addition, he contributes to CNBCand CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

Follow Michael Santoli on Twitter @michaelsantoli

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