Emerging markets endured a tumultuous first half as the Covid-19 outbreak made the start of 2020 one of the most unpredictable in decades.
As if the pandemic wasn’t enough, traders and investors also had to grapple with the resurgence in US-China tensions and a collapse in oil prices, condemning developing-nation stocks, currencies and bonds to heavy losses over the period. The ramifications are likely to play out a long way into the future as a global recession now appears almost a certainty.
Here’s a look back to the past six months in emerging markets:
Wuhan outbreak
Even as analysts were predicting a positive year ahead, a new and highly contagious virus was spreading in central China. Investors were optimistic after the signing of an initial US-China trade deal until news of the mysterious pneumonia outbreak started to raise concerns. Global risk assets began to tumble in mid January as China raced to contain infections. A gauge of emerging-market stocks tumbled more than 30% before bottoming in late March.
Rock-bottom rates
Faced with the imposition of unprecedented lockdowns around the world to contain the virus, central banks rushed to provide liquidity while governments announced record stimulus. From Brazil to South Korea, officials in emerging markets cut rates to all-time lows, while some introduced unconventional policies. Optimism over these efforts helped staunch the stock sell-off even as the number of infections continued to grow. The extreme accommodation provided by policy makers saw emerging-market dollar bonds post their biggest quarterly gain since 2009 in the second quarter.
Blame game
After US-China relations improved toward the end of 2019, they took a decided turn for the worse in the first quarter as America became one of the global hot spots of the pandemic, prompting President Donald Trump to accuse Beijing for mishandling the outbreak. The spat evolved to include a range of issues from trade to human rights, and Beijing’s imposition of a new security law on Hong Kong. China’s yuan dropped to match the lowest on record versus the dollar in offshore trading amid speculation the government was willing to permit a weaker currency in response to punitive measures from the US Still, both sides have signaled that their trade agreement remains intact.
Oil free-fall

Oil storage tanks stand at the RN-Tuapsinsky refinery in Tuapse, Russia, on March 23.
The collapse of an alliance between the OPEC cartel and Russia that had underpinned oil markets for three years led to a historic crash of crude prices to below zero in March. The slump exacerbated economic stresses in countries such as Russia and Indonesia that were already weak from the coronavirus fallout. An agreement to reduce production was reached in April and producers extended it in June. Even with the deal, the Russian ruble slumped more than 10% in the first half.
Latam Hotspots

Brazil’s Marine Corps soldiers perform disinfection operations at Tram stations in downtown Rio de Janeiro, Brazil, on April 16.
Latin America became the…
Read More: From fear in Wuhan to oil crash: Six months in emerging markets