In other emerging economies, including Malaysia, Chile, Russia, Brazil and Turkey, Deutsche Bank's Smith sees political unrest pushing governments "further towards populist policies, which will accentuate the transfer of resources away from the corporate sector, thus further undermining longer term economic growth prospects." He argues emerging markets countries "are more vulnerable to these pressures than their developed markets peers because of the generally less well developed institutional and legal infrastructure as well as lower output gaps."

Despite his long-term bearish view, Smith sees short-term opportunities since emerging markets assets have sold off so sharply of late. He is overweight Mexico, Turkey Poland and Taiwan. "which combine cheap currencies and/or high dividend yields, with governance at a sovereign and corporate level, which is at the very least not obviously deteriorating."

While he sees Brazil and Russia as "so unloved by investors that they are candidates for the 'it's so bad, it's good' club," he nonetheless remains underweight, "since governance at the sovereign and corporate level is still moving in the wrong direction." Deutsche Bank is also underweight China "obviously," and in Korea, "where we are becoming a little less bearish."

-- Written by Dan Freed in New York.

Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.

If you liked this article you might like

Emerging Market Stocks Set to Close August on Fire

Stocks Tank as Trump, North Korea Exchange Barbs

Gundlach Eyes Emerging Market Investing