Emerging Markets Equity Commentary | Q2 2020

Quarterly Letter

Decisive global fiscal and monetary policy responses to COVID-19 drove a sharp re-rating in asset prices in the second quarter, including emerging market equities that gained 18%, paring their losses from the prior quarter.  The impact of the unprecedented fiscal expansion, monetary easing, and widespread suspension of personal and commercial loan repayments will take years to unwind and leaves emerging market policy makers little room for error going forward.  This crisis will almost certainly inject an additional facet into debates around global trade as governments try to protect and strengthen their domestic industries. Countries that have struggled with their responses to the pandemic risk falling further behind China and other northern Asian countries with economies that are already recovering and gaining share in exports. Through the quarter, we added to existing positions in leading companies with strong balance sheets that can meet the challenges posed by the pandemic and thrive in a recovery.