15 February 2021
Despite some profit taking in the final week of January, EM capital markets started 2021 on a reasonably strong note. Thereby continuing the market buoyancy of the December quarter 2020. To some extent EM is still basking in the glow of the Democrat victory (with ensuing benefits to EM trade and investment).
As with equity markets, economic activity globally has started to recover over the past 6 months. Year on year growth is still in decline, but sequential months are improving – in some cases sharply. Although November and December data showed that the rate of improvement has tailed off in EM – it seems activity levels improved again over January – an encouraging sign.
As we commence 2021 the world continues to grapple with significant challenges, yet as always there are appealing opportunities with which to focus attention and capital. EM remains an attractive asset class but requiring very careful and consistent application of active equity investment.