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Macro Insight - ‘Fortress’ emerging markets

The COVID-19 pandemic presents a unique test for emerging market economies. We have developed a ‘fortress’ rank to assess which are better positioned.
12 June 2020
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    Key takeaways:

    • The COVID-19 pandemic has presented a unique test for emerging market (EM) economies, which are a highly varied group
    • We have developed a ‘fortress’ rank to assess which EMs are better positioned
    • We think mainland China and industrialised Asian economies (Korea, Taiwan) are best positioned for recovery from the COVID-19 shock
    • This supports our strategic preference for Asia ex. Japan equities over other parts of EM
    • Mainland China, Taiwan and Korea got on top of the virus quickly, allowing swifter easing of lock-down measures. This is reflected in road traffic indicators
    • Countries with higher fortress rankings have seen relatively stronger asset performance, but there are some exceptions
    • We have a strategic preference for Asia ex. Japan equities given good prospects for mainland China, Korea, and Taiwan
    • Being selective within EM assets is key