Although MSCI’s indices of emerging market (EM) equities in EMEA and Latin America have recovered some ground since 23rd March, the bigger picture is that they have underperformed equities elsewhere substantially since 19th February, when stock markets in general began to slump amid fears of a global outbreak of coronavirus. This is particularly the case when measured in US dollars, as the currencies of many commodity-dependent countries in these indices have also been hit hard. Given how poorly they have fared already and our positive view of commodity prices from here, we expect the underperformance of the indices to end soon. Still, that assumes the outbreaks of Covid-19 in the countries that are the main constituents of the indices are brought under greater control.
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