1. Along with other major economies in the world, India has taken bold steps to contain the spread of COVID-19. The differentiated restoration of some normalcy with specified conditions should help the economy to gradually restart. The government also announced a $22.6bn economic stimulus plan and the Reserve Bank of India (RBI) provided additional support, which helped restore some confidence in financial markets and boost liquidity. For companies, we think balance sheet resilience is now crucial as the impact on businesses largely hangs on when the economy will reopen.

2. Adding to Brazil’s COVID-19 woes, political uncertainty heightened in April following the resignation of the country’s popular justice minister and the president’s dismissal of the country’s health minister. A key concern for Brazil is its high debt/gross domestic product (GDP) level, which will increase further as a result of the fiscal stimulus. While the short-term situation in Brazil remains volatile, we remain positive on Brazil over the longer term and continue to favour domestic-oriented themes including financials, infrastructure and consumer-related sectors, which we believe should benefit from the country’s economic recovery.

3. We have started seeing signs of recovery in the information technology sector, with the MSCI Emerging Markets Information Technology Index rebounding over 20% from its recent low in late-March. In times of crisis, businesses tend to adapt accordingly, and embrace technology much more quickly. Education is a good example of that; schools have embraced the use of online technologies to provide a learning platform for students. E-commerce, internet and software companies are also benefiting from an increase in online activities. Over the long term, technology evolution and digitalisation is expected to continue. In our view, the current situation will probably accelerate the adoption and development of some of these themes going forward.

‹ Previous2020-05-28Next ›