External shocks remain the main theme in the volatile market. As the revered covid-19 spreads across the globe, the outbreak is no longer limited to China, the economies of other major markets in Europe and Americas are all expected to take a hit, direct or indirect. Major international organisations including IMF and World Bank have revised their outlook for the year, citing a huge drop of economic activities in 2020 Q2 is to be expected. This would likely be noticeably worse for emerging markets, which are more likely to be dependent on industrials, exports, and tourism, all of which hit hard by the virus.

To make matters worse, numerous emerging markets themselves saw outbreaks in their own country, resulting in country lockdowns, halting economic activities for the time being with no end in sight. The situation is not expected to recover rapidly as confidence and sentiment are low. Until the epidemic situation peaks, we do not expect emerging markets to outperform in the short term, investors should stay cautious when considering investments in the relatively fragile market.