Question
The poor performance of emerging markets in 2021 can be attributed to several factors. One of the main factors was global inflation, which led to an increase in interest rates. This made investments in these markets less attractive. Additionally, the recovery from the pandemic was inconsistent across different markets, further contributing to their instability. Lastly, market reforms, particularly in China, also played a role in the poor performance of emerging markets.
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Conversely, 2021 has ended poorly for emerging markets. Barrons reported that the iShares MSCI Emerging Markets ETF lost 12% of its value since July 1st. This is judged against the S&P 500 which gained 9%. This is largely due to global inflation that drives up interest rates, off and on pandemic recoveries, and reform across markets like China. However, the second half of 2022 is seen by many as advantageous to emerging markets once inflation peaks and the US Federal Reserve tightens. Emerging markets will then become more attractive to investors and businesses. Therefore, emerging markets are a hot topic to consider in your presentations and growth strategies for the second half of 2022. (Slide 8)
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