LONDON, – Emerging-market stocks hit a record high for the first time since November 2007 as the combination of post-COVID 19 recovery hopes, mass global stimulus and a weak dollar boosted investor confidence.
MSCI’s main emerging-market index which covers nearly 1,400 companies across 27 developing-world countries set the new record as it topped 1,345 points, a milestone that also took its surge since March’s lows to almost 80 percent.
Investors have stampeded back into emerging assets in recent months, with record monthly inflows in November helping offset the record exodus seen in March as the pandemic shuttered much of the global economy.
The weak dollar flatters home earnings for emerging-market companies in dollar terms and make foreign-currency debt payments easier, said Standard Life Aberdeen investment director Nick Robinson.
“And there are just a lot of stocks that are benefiting from this (global) rotation from growth to value,” he added, highlighting mining companies as one sector that has been “on a real tear lately”.
MSCI’s EM index has a bigger share of mining, energy and financials than the all-world equivalent. It is still heavily weighted towards Asian technology and internet giants however.
Taiwan Semiconductor Manufacturing Company (TSMC) Chinese duo Alibaba and Tencent and Korea’s Samsung account for roughly 20 percent of the index. Adding all tech and communications companies plus internet-focused firms like Alibaba adds up to over 40 percent of the index.