Emerging markets have just taken a first-quarter battering. The fear on Wall Street is that it may hardly compare with what’s coming.

While the advanced economies have gone into lockdown to contain the spread of Covid-19, triggering market turmoil of a kind unseen in generations, the world’s developing nations have yet to experience the full effects, both economic and humanitarian, of the pandemic. True, the global dollar squeeze, collapse in commodity prices and rising distressed-debt levels have prompted pre-emptive stimulus measures across many countries, but the success or failure of these is likely to remain unknown for a while yet.

Little wonder then that some of the world’s foremost investors and strategists, from Goldman Sachs Group Inc. to JPMorgan Chase & Co. and Franklin Templeton, are telling clients to hold off on bargain hunting. They’re worried the coronavirus could devastate nations such as India, South Africa and Brazil, where infections are only now starting to gather pace.

“Markets are discounting a catastrophic recession accompanied by massive defaults,” said Ricardo Hausmann, an economist at Harvard University. “As horrific as this sounds, the situation in the advanced economies is likely to be much more benign than what developing countries are facing. Not only in terms of the disease burden, but also in terms of the economic devastation.”

Emerging markets are traditionally thought of as volatile, and perhaps it’s no surprise that their assets generally came off worse than their counterparts in the advanced economies of the U.S., Europe and Japan. But while banks such as JPMorgan and Morgan Stanley say developed-nation stocks have probably bottomed already, that’s not the case for their emerging-market counterparts.

Equity markets in the developing world just capped their worst quarter since the 2008 financial crisis. Currencies tumbled as demand for U.S. dollars soared, led by a depreciation of more than 20% in the Brazilian real, South African rand and Russian ruble. A broad gauge of dollar bonds from emerging markets posted its sharpest sell-off since 1998.

Developing-nation assets kicked off the second quarter on a negative note on Wednesday as stocks from India, South Korea and Colombia slid, currencies declined and the risk premium on bonds rose.

With emerging economies reeling from a slump in demand for commodities such as oil and metals, supply-chain disruptions and dollar-debt burdens exacerbated by weakening currencies, outflows are likely to surge in the next few quarters, according to a JPMorgan model.

“It’s unlikely this crisis is over as it moves from an acute to a chronic phase,” Luis Oganes, a London-based strategist at JPMorgan, wrote in a report. “Focus will turn to emerging-market country vulnerabilities over the coming months as capital outflows could mutate into a sudden stop.”

Hausmann and Oganes may be gloomy, but they’re in good company. In fact, a “Who’s Who” of economists and investors, including Mohamed El-Erian, Michael Hasenstab and Carmen Reinhart, are also sounding the alarm.

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