2021: a year to forget for investors in emerging market stocks

Emerging market stocks have fallen from favour with international investors, with the MSCI Emerging Markets index down by more than 4% since the start of the year.

View of Taipei
Taiwan’s chipmakers have propelled the local Taiex index to an 18% gain this year
(Image credit: © Getty Images)

It has been a year to forget for investors in most emerging markets. Developing countries’ populations have received far fewer vaccinations than their developed-country peers. Economies are vulnerable to inflation and with government borrowing rising, the asset class is increasingly out of favour with international investors.

Last month, “non-resident [financial] flows to emerging market assets excluding China turned negative” for the first time since March 2020, say Kate Duguid and Jonathan Wheatley in the Financial Times. Investors’ enthusiasm for emerging markets has dwindled this year and 2022 may not prove much better. Many emerging markets are caught between a Chinese slowdown on the one hand and tighter US monetary policy on the other. Higher US interest rates strengthen the dollar, making it difficult for countries such as Turkey, Brazil, South Africa and India to secure the credit they need as money heads to the world’s biggest economy.

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Markets editor

Alex is an investment writer who has been contributing to MoneyWeek since 2015. He has been the magazine’s markets editor since 2019. 

Alex has a passion for demystifying the often arcane world of finance for a general readership. While financial media tends to focus compulsively on the latest trend, the best opportunities can lie forgotten elsewhere. 

He is especially interested in European equities – where his fluent French helps him to cover the continent’s largest bourse – and emerging markets, where his experience living in Beijing, and conversational Chinese, prove useful. 

Hailing from Leeds, he studied Philosophy, Politics and Economics at the University of Oxford. He also holds a Master of Public Health from the University of Manchester.