The war in Iran has triggered a sharp selloff in emerging markets, with the MSCI equity index posting its biggest weekly drop in six years. Stocks and currencies have tumbled, and bond yields have jumped, as investors flee to safety amid escalating Middle East tensions. Brent crude has surged past $90 a barrel, amplifying fears about economic growth in oil-importing nations.

Despite the turmoil, major money managers including Pacific Investment Management Co., Barings LLC, and T. Rowe Price argue the long-term case for emerging markets remains intact. They cite attractive valuations, solid economic growth, and a push to diversify away from US assets as key drivers that will reassert themselves once geopolitical shocks fade. Investors added $12.6 billion to emerging-market stocks and bonds in the week through Wednesday, according to Bank of America Corp., suggesting many are buying the dip.

JPMorgan Chase has cut its recommendations on emerging-market assets three times in the past week, moving to tactical underweight positions on sovereign and corporate dollar bonds. Portfolio managers are taking a measured approach - some increasing exposure to local currencies in countries like South Africa, Colombia, and Chile while reducing positions in Gulf nations. The consensus view is that emerging markets offer value and diversification benefits, but near-term volatility will persist until conflict duration becomes clearer.