It wasn’t long ago that Goldman Sachs analysts ominously predicted the turmoil engulfing emerging markets would trigger the third wave of the 2008 financial crisis. The analysts’ note, issued in October, said the impact of falling commodity prices, stalling Chinese growth and the prospect of higher US interest rates on emerging economies would combine to create the third instalment of the Great Recession. (The first stage being the US subprime crisis and the second the European sovereign debt crisis).

Fast forward a few months to the end of March and emerging market currencies had just enjoyed their best month for 18 years after the dollar fell in response to the Fed’s announcement that it would adopt a cautious approach to rate increases. With China also showing signs of stabilisation, emerging market bonds and equities were rallying as both institutional and retail investors renewed their interest in the once-loved but recently maligned sector.

The turnaround suggested that either the dire prediction of Goldman Sachs’ top analysts had been woefully wide of the mark or that, against all odds, emerging markets had truly staged an impressive and unexpected recovery. But had the sector — once feted as the investment promised land only to recently disappear into the investment abyss — actually turned a corner?

It appears not. In yet another twist worthy of this season’s Premier League title race, it seems the rally may have been something of a false dawn. After three months of gains, emerging market stocks and currencies were dragged down at the end of April amid renewed fears about global growth and disappointing manufacturing data. As of May 9, the MSCI Emerging Markets index declined for a seventh day to notch up its longest losing run since December.

So just when it seemed emerging markets were re-emerging from a prolonged downturn, the sector has once again fallen victim to macroeconomic headwinds and the ensuing negative sentiment. A few months is a long time in emerging markets. Or so it seems.

Adding to the new doom and gloom, S&P Global Ratings recently published a report warning that emerging markets face the threat of sovereign ratings downgrades. The report, which came on the back of a similar warning from the IMF in April, said the risk of downgrades stems from public companies struggling to address escalating levels of debt.

Country-specific factors have also been at play. Istanbul-listed stocks, for example, have plunged amid political turmoil in Turkey which culminated in the country’s Prime Minister stepping down on May 5. On that same day, Brazil’s sovereign debt was downgraded further into junk territory by Fitch Ratings, citing the country’s economic contraction and political uncertainty.

Meanwhile, some major emerging economies are grappling with a demographic time bomb due to ageing populations which pose a serious threat to their economic growth and prosperity. China’s demographic problems are particularly acute.

Amid this latest downturn in sentiment, emerging markets-focused Aberdeen Asset Management recently posted a grim set of results. Earlier in May, the asset manager reported net outflows of £16.7bn for the six months to 31 March. Furthermore, the company — which dropped out of the FTSE 100 index earlier this year — warned it is not expecting a turnaround in emerging market sentiment any time soon.

While the sense of gloom is by no means universal — PIMCO is one asset manager looking to increase its emerging markets exposure in countries including Mexico and South Africa — it nevertheless seems that emerging markets have lost their mojo again in the eyes of many investors.

The emerging market story and its constant twists and turns encapsulate both the fickleness and the power of investor sentiment. And it also demonstrates how exposed and susceptible the sector has become to short-term macroeconomic headwinds, and especially falling commodity prices, all of which make it imperative for investors to adopt a longer-term horizon when assessing the sector’s potential.

Emerging markets are blighted both by a short-termism and a narrow investment focus that takes a sector, rather than country-specific, approach.

But perhaps some of the confusion and noise around whether these economies are currently emerging, re-emerging or submerging, results from flawed terminology. The very term emerging markets implies that one day they will become emerged markets. Our jargon-obsessed industry has a tendency to label often complex processes and phenomena with catchy names in an effort to simplify and make sense of things. But these terms risk becoming redundant and outdated amid rapidly changing market fundamentals. So perhaps the latest downturn in investor sentiment toward the sector has more to do with terminology than methodology.