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Another VIX shock suggests opportunities in EM equities

Weekly investor research

01 February 2021



Last week the Chicago Board Options Exchange Volatility Index, or VIX as it is more commonly known, spiked by 59% to 33.1, impacting asset prices which, in our opinion, make EM equities and EM local bonds look attractive. In China, PMIs softened in January as higher Covid-19 cases affected mobility. Brazil’s monetary authority signalled rate hikes in 2021 to avoid an escalation in inflation expectations. Ethiopia announced a debt restructuring under the G-20 Debt Service Suspension Initiative (DSSI). South Korean and Taiwanese economic data surprised to the upside on strong production and exports of semiconductors. Turkey’s FX reserves remained at concerning levels. India’s budget was unveiled aiming for a deficit of 6.8% of GDP in the next fiscal year. Chile’s Finance Minister stepped down to run for President. Russia detained pro-Navalny protesters. Myanmar’s military staged a coup.

 

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