On Friday, portfolio managers Daniel Graña and Matt Culley issued a release on the trajectory of emerging markets coming out of the COVID-19 pandemic which they say has “dictated” the trajectory of economies and financial markets in 2021.
“Anticipation of increasing economic activity pushed EM equities benchmarks to record highs in February,” Mr Graña and Mr Culley said.
“Later, the spread of the Delta variant and the threat of renewed curtailment of commerce exerted downward pressure on the asset class.”
Mr Graña and Mr Culley argued that the advancement of emerging market economies moving forward will be driven by innovative private companies “seeking to address the unique needs of these regions’ consumers and business customers”.
However, while the private sector is considered the biggest factor in the future of emerging markets, it’s believed that there will be vastly different trajectories for countries, depending on how they have responded to the pandemic in relation to vaccination rates and new variants among other variants.
“Those that succeed in combating the pandemic may return more quickly to their pre-2020 economic path,” Mr Graña and Mr Culley said.
“Countries that are slow to roll out vaccines or address uncontrolled viral spread may face longer-term health, economic and fiscal repercussions.”
Janus Henderson remains optimistic despite this due to the adaptation of digital technologies brought on by COVID restrictions globally, which will open up access to value-added technologies and intellectual property within emerging market economies.
It’s predicted that investors will be “tested” to identify the stronger trends and innovative companies and which countries are experiencing bouncing back quicker than others.
