Loose developed market (DM) monetary policy, rising commodity prices and effective COVID-19 vaccines are converging to drive global capital flows to emerging markets (EMs). In our view, these dynamics are likely to overshadow challenging domestic fundamentals and reboot growth in most economies, supporting local currency assets. Capital flows to emerging markets typically accelerate following global recessions. Yet we believe the backdrop to 2021, while not without risk, has the potential to be record-setting for several reasons. A strong synchronized recovery is anticipated. The cyclical rebound from 2020’s ... (full story)