1. The emergence of the new Covid-19 Omicron variant added uncertainty to the global recovery with financial markets selling off in late November on concerns of new lockdowns and mobility restrictions. On the positive side, early indications from South Africa, where the variant was first discovered, suggest that Omicron’s symptoms are less severe than previous variants. While we could see increased market volatility in the near term, continued implementation of public health measures and vaccination rollouts could help slow the virus transmission and limit potential future outbreaks. History has shown us that it is crucial to maintain a long-term view and not be derailed by short-term bouts of volatility. We are of the opinion that emerging markets (EMs) remain an attractive investment opportunity with solid fundamentals.

2. Public policy around climate change has been shifting quickly. The 2021 United Nations Climate Change Conference (COP26) can be touted as the most significant global meeting since Paris 2015, where countries entered a legally binding international treaty—the Paris Accords—to reduce emissions and limit global warming to 2.7°F (1.5°C). COP26 was the critical next step and included a global call to action to raise trillions of dollars in private and public financing. EM governments will need to adopt growth-enhancing fiscal and structural reforms that promote low-emission resilient investments, backed by productive and cost-effective climate policies to achieve climate-compatible development.

3. Digitalisation in India has been advancing at a rapid pace since 2016, thanks to government initiatives, inexpensive mobile data and a significant step-up of venture capital and private equity funding. And as in most other countries around the world, Covid-19 accelerated the adoption of e-commerce and digital services in India in 2020 and 2021. Companies related to the internet and digital economy have also been gaining prominence on Indian stock exchanges, providing exciting investment opportunities and diversifying the overall market. Interesting trends we currently see include India’s online classifieds market, which has developed swiftly across multiple areas. More traditional businesses have also embraced digitalisation. In the banking industry, for example, several players have raced to develop technologies that can improve their customer service through digital channels. 

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