Our perspective on global micro event and strategies.
Vera leads Wellington Management’s Emerging Markets Equity Team and manages emerging markets equity portfolios — a product she founded in 1994. She monitors investment opportunities in more than 30 countries in Latin America, Asia, Central and Eastern Europe, the Middle East, and Africa.
The recent acceleration of sovereign-debt defaults in emerging markets (EMs) — three so far in 2020, with more likely to come — reminds me of the less-developed-country (LDC) debt crisis of the 1980s.
In August 1982, Mexico informed its creditors that it was unable to service its US$82 billion of outstanding debt. By October 1983, 27 more EM countries, including 16 in Latin America, found themselves in the same precarious position. Negotiations with international bank lenders dragged on for seven years. The Brady Plan of 1989 finally resolved the debt crisis, marking the onset of the EM asset class as we know it today. By then, however, the decade of the 1980s had been “lost,” with virtually no investment and no…
Recent price-to-book (P/B) ratios relative to history underscore how wide the performance dispersion within emerging markets (EM) has become amid the COVID-19 crisis (Figure 1). Looking ahead, I expect this trend to persist and perhaps accelerate.
As a result, I believe we have entered a period in which country selection — or more precisely…