Emerging economies have received little attention in the economic debate regarding the COVID-19 pandemic, yet the performance of their primary market indicators, chiefly sovereign debt, foreign exchange and equities, indicate a deep deterioration is taking place. Times of crisis often lead to capital flight from emerging markets as investors seek safe haven assets, while the localised effects of the disease and the collapse in the price of certain key commodities have also been damaging. More worryingly, this appears to be the beginning of the storm, and emerging economies have far less room for fiscal and monetary manoeuvring.
This report presents an overview of the recent trends of capital flows, focused especially on the past year. It provides a detailed analysis at the global level and at the European Union level.
The Hong Kong economy has been hit by a series of shocks, but it should resist taking drastic measures to keep foreign capital in the city.