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COVID-19: Risk and resilience in emerging markets

Morningstar  |  26 May 2020Text size  Decrease  Increase  |  
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The coronavirus pandemic has moved from being a China-specific concern to becoming a global threat to health and economic growth.

There are unique risk factors that accompany it. But one must understand a country’s ability to mitigate those risks to determine how well that country will navigate the crisis.

Take emerging markets. Not all EM countries will be affected similarly given these nations vary in their resilience and ability to respond and bounce back. As investors, it is critical to understand the factors that both contribute to and detract from a country’s efforts to move forward once the imminent danger of this pandemic has receded.

In Covid-19: Risk and Resilience in Emerging Markets, Amit Bhartia, Tiger Tong and Uday Tharar of GMO’s Emerging Markets Equity team decided to delve deeper.

They present observations from their proprietary “Covid-19 Risk Assessment” framework, which identifies where EM countries fall on the vulnerability scale.

Risk assessment framework

The framework distributes 15 factors across 4 categories. For each factor, a score of 0 (best) to 10 (worst) is assigned.


 GMO 2

Ability to respond framework

This framework employs 12 factors across 5 categories. The score ranges from 0 (best) to 10 (worst).



On combining the two scores, the divergence among EM countries’ ability to recover from the pandemic is significant.


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