Covid Reaches the Third World
Emerging markets can spice up a portfolio. Nations playing catch-up economically have long made for clever pockets of growth for brave investors. The pay-off is enormous if you get your timing right. However, one political flare-up can be enough to take you out of the game.
It’s dangerous to do business in these countries, which makes it dangerous to own businesses as well. Traders be warned, volatility is the norm, and currencies can move on you overnight.
In keeping with its status as an emerging market, springbok stock investors partied hard during last week’s global rebound in markets. However, as the contagion spreads around Cape Town, we’re seeing the South African Rand lose more ground to the US dollar. The country might be about to regret its high unemployment, poverty, inequality, and growing debt-pile.
Globetrotting investors around the world have been splurgin’ on the emergin’ for years. Now, they’re waiting for the perfect moment to switch their from long positions to short. The decision could be made in a matter of hours, not days or weeks.
Videos have been leaked this week of the army using force against disobedient South Africans, making them “self-isolate” and comply with “social distancing” measures. The issue is that when six live in one room and citizens must shop every day for supplies, social distancing is near impossible. New solutions are needed.
The coming weeks could see volatility redefined in some areas of the world where trillions are invested. Stay ahead of the curve, people.