As investors have digested the prospect of an effective vaccine against COVID-19, many of the patterns in financial markets which have been a feature during the pandemic have started to unwind. One example is this year’s stark underperformance of MSCI’s indices of EM equities in Latin America and EMEA relative to its MSCI EM Asia index. While the former two indices rose by ~5% and ~3% respectively in US-dollar terms between 8th and 11th November, the MSCI EM Asia fell slightly. This partly reflects a rebound in the price of oil, a key export for some major economies in Latin America and EM EMEA, and the bounce-back in energy stocks, which have a larger weight in the MSCI Latin America and MSCI EM EMEA than the MSCI EM Asia. An effective vaccine might also provide more of a boost to major economies in the former two regions, given that COVID-19 outbreaks remain much worse there than in China, South Korea, and Taiwan.
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