Investors are ditching emerging market stocks as they brace themselves for president-elect Donald Trump’s proposed trade tariffs and contend with a soaring US dollar and rising bonds yields.

MSCI’s emerging markets index, which tracks nearly $7.6tn in stocks across China, India, Brazil, South Africa and other markets, is down more than 10 per cent since hitting a two-and-a-half-year high on October 2. Developed market stocks are roughly flat over that period.

Emerging markets have been hit by bets that inflationary policies such as tariffs and tax cuts under Trump, on top of an already buoyant economy, will force the Federal Reserve to keep interest rates elevated for much longer than previously anticipated. US government bond yields have shot higher in recent weeks as traders reassess their outlook for inflation.