The vote by the UK to leave the EU is already creating a flight to safety, with financial markets in EMs that have deeper and more liquid markets (Mexico), large current account deficits (South Africa), heavy foreign currency debt burdens (Malaysia), or larger ties with the UK (Poland) suffering the steepest falls. But while the fallout from the vote is likely to weigh on EM asset prices over the coming days, the direct economic impact on the emerging world is likely to be smaller than many fear.
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