Learn To Invest
Stocks Special Reports LICs Credit Funds ETFs Tools SMSFs
Video Archive Article Archive
News Stocks Special Reports Funds ETFs Features SMSFs Learn
About

News

COVID-19: Risk and resilience in emerging markets

Morningstar  |  26 May 2020Text size  Decrease  Increase  |  
Email to Friend

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 1

 GMO 2

Ability to respond framework

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

GMO 3

GMO 4

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

GMO 5

Any Morningstar ratings/recommendations contained in this report are based on the full research report available from Morningstar.

© 2021 Morningstar, Inc. All rights reserved. Neither Morningstar, its affiliates, nor the content providers guarantee the data or content contained herein to be accurate, complete or timely nor will they have any liability for its use or distribution. This information is to be used for personal, non-commercial purposes only. No reproduction is permitted without the prior written consent of Morningstar. Any general advice or 'class service' have been prepared by Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), or its Authorised Representatives, and/or Morningstar Research Ltd, subsidiaries of Morningstar, Inc, without reference to your objectives, financial situation or needs. Please refer to our Financial Services Guide (FSG) for more information at www.morningstar.com.au/s/fsg.pdf. Our publications, ratings and products should be viewed as an additional investment resource, not as your sole source of information. Past performance does not necessarily indicate a financial product's future performance. To obtain advice tailored to your situation, contact a licensed financial adviser. Some material is copyright and published under licence from ASX Operations Pty Ltd ACN 004 523 782. The article is current as at date of publication.

Email To Friend