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As the reality of a safe and effective Covid-19 vaccine draws nearer, investors and money managers are investing money into emerging markets – some of which found themselves at the frontline of the Covid-19 onslaught. According to the Wall Street Journal, investors “channelled $10.8 billion into funds that invest in emerging-market stocks and bonds”. Countries such as Brazil and India that were hardest hit at the peak of the pandemic continue to suffer the side-effects of an economy-wrecking pandemic. Still, risk-on investment into emerging markets could be just the shot in the arm for developing economies, including South Africa that was recently the recipient of even further investment downgrades. – Jarryd Neves
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Covid vaccine hopes send record funds to emerging markets
Money managers look to life after Covid-19, betting on a big rebound in emerging economies
The amount of money flowing into emerging-market funds last week hit an all-time high, as advances in vaccine development and a weaker dollar boosted investors’ risk appetite.
Investors channeled $10.8 billion into funds that invest in emerging-market stocks and bonds, according to research from Bank of America and EPFR data, a sum the bank said was the highest ever. The largest net purchases by foreign investors included Indian and South Korean equities, as well as Mexican government debt, according to data from Capital Economics.
The activity marked a turnaround for many developing economies, which have been largely shunned this year due to the spread of the coronavirus and the subsequent hit to global growth. Fund managers pulled more than $70 billion out of emerging markets in March, April and May, according to Morningstar.
But positive developments for vaccines in recent weeks have investors preparing for life after Covid-19, and some are making bets on how to reap the biggest rewards.
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