Investors aren’t rushing to buy the dip as US-China trade tensions escalate.

The results of India’s elections are due this week, South Africa will decide on interest rates and Argentinian investors will be able to react to Cristina Fernandez de Kirchner’s surprise decision to run as a vice-presidential candidate, potentially adding volatility to an asset class already famed for its erratic behaviour.

“Some interesting opportunities are beginning to present themselves in some spots of the EM universe, but over the coming weeks it feels like caution is warranted,” said Paul Greer, a London-based money manager at Fidelity International, whose emerging-market debt fund has outperformed 98 per cent of peers this year after reducing risk in recent months.

Developing-nation currencies relinquished all of their 2019 gains amid growing pessimism over the prospect of a trade deal between the world’s two largest economies, while stocks and local-currency bonds fell to the lowest level since January. Carry-trade returns from eight emerging markets funded by short positions in the dollar slid below its 200-day moving average on Friday, heralding further declines.

“For now, we are being patient, observing the US-China trade negotiations and price action in core rates and equities, and biding our time,” said Greer.