Investors pulled more than a whopping $ 80 billion from developing stocks and bonds in March. But, since then Emerging Market bond premium soared as yields reduced significantly while covid-19 cases began to peak across the world. Countries reaching peak numbers makes risky assets more attractive as it is an indicator that the economy will turn around sooner rather than later. And given the high returns, in a turn-around scenario Emerging Markets are one of the most rewarding places to have your money.
Although 25% of investments withdrawn from EM have now returned, analysts believe that countries with weak fundamentals like South Africa, Brazil and Argentina may ‘snap-back’ on the fact that aside from Covid-19 there are still political and fiscal problems which remain to undermine a smooth return to economic stability.
For you guys who thought your holidays are getting cheaper, with Emerging Markets strengthening vs Dollar it is likely that you may have to save a bit more before you go.