"The EM sell-off has been large for Argentina and Turkey, which raises the risk of contagion to the broader EM complex… Concentration risk exists in Lebanon, Colombia and South Africa, and could be a channel for contagion to the broader EM complex," the report said.
Emerging market countries with with highest levels of foreign cash flows are most likely to be hit by contagion.
"Argentina stands out on the debt side, with the government's 'gradualism' translating into large external bond issues and inflows," the IIF said.
The IIF said that higher funding costs among nations have also "been making life more difficult" for countries like Argentina and Turkey with high external financing needs.
Other factors have included dangerous currency over-valuations, and the Eurozone crisis which has weighed on many linked EM nations.
"The current situation could create a channel for contagion to the broader EM complex," the report said. ...