The devaluation of currencies will put further pressure on emerging market economies, Columbia Threadneedle Investments has warned.

The asset manager said recent activity on China should not be overplayed compared with more structural issues in other emerging markets, particularly given the raft of policy options left for the world’s second-largest economy.

Other emerging markets, however, do not enjoy the same options.

They have become policy takers and are at further risk of deflation, warned Jim Cielinski, the asset manager’s global head of fixed income.

Speaking at a media conference, Cielinski said external debt defaults were the system by which ailing emerging economies pegged to the US dollar were punished.

But in a floating currency regime, he said, foreign exchange had become the “relief valve” for investors.

“If you could look at the magnitude of the currency moves, the relief valve is what is going on,” he said.

“Emerging markets outside of China are in trouble. China has enough policy options to hold growth where it is, but it is important to realise emerging economies are policy takers.”

Cielinski said emerging markets were paralysed by weakening currencies, as it ruled out the option of quantitative easing to boost internal demand.

He said this also meant pressure on costs, as weaker currencies translated into higher import costs.

However, Cielinski said this would be a deflationary environment as higher import costs resulted in real incomes falling, rather than being inflationary.

“Most of the stress on the other [than China] emerging market economics will be exerted through the currencies,” he said, suggesting currency movements would highlight opportunities over default rates.

“Everything in emerging markets has been for sale, indiscriminately. And this is where a lot of opportunities arise.”

Cielinski added that investors would punish emerging markets until more structural reforms were tackled.

“There is a huge amount of correlation across the market, as they are heterogeneous economies,” he said.

“When you see tight correlation, it is a sign you’re in the latter stages of a sell off.”