The global energy system is in a state of upheaval, thanks to the Covid-19 pandemic, which has “caused more disruption than any other event in recent history, leaving scars that will last for years to come,” says the International Energy Agency (IEA) in its latest World Energy Outlook (WEO).
“But whether this upheaval ultimately helps or hinders efforts to accelerate clean energy transitions and reach international energy and climate goals will depend on how governments respond to today’s challenges,” the report adds, suggesting that the next decade will be pivotal to both recovering from the current crisis and to tackling climate change.
Global energy demand is set to drop by 5% in 2020, with energy-related CO2 emissions down by 7% and investment in the sector 18% lower than the previous year as the pandemic-induced lockdowns around the world depress economic activity. Global energy
Emerging markets are in the process of economic healing despite the uneven impact of COVID-19. Lower rates and higher fiscal spend have created a significant rebound, but at what cost? We strive to isolate the truly exceptional, structural growth companies from the noise and market volatility of ongoing macro events. Additionally, it is worth pointing out that risk aversion has disproportionately affected small- and mid-cap stocks in emerging markets. As markets normalize, we believe it is reasonable to expect relative outperformance from these smaller stocks. As a “true” all capitalization strategy, these changes in sentiment can materially affect the relative performance of our portfolio.
As the third quarter unfolded, so did the ongoing rebound of emerging markets economies. Easing of virus restrictions, coupled with supportive emerging markets government policies, boosted growth across emerging markets. Indeed, emerging markets governments around the world continued offering fiscal stimuli, including discretionary easing and loan