North South University

Summary On

How investors can navigate pandemic-related risk in

Emerging Markets

Submitted to
Aditi Mansur Mahmud(ASSM)
Marketing & International Business Dept.
North South University
Course: INB480
Section: 01

Submitted by

Name ID
Jahida Akter Lovna 1610106630
 How Investors Can Navigate Pandemic-Related Risk in Emerging Markets

Executive summary
Covid-19 poses a noteworthy disadvantage to foreign investors in emerging markets.
Business environments in these markets were already complex, but the pandemic makes the
politics even more complicated, and the relationships and information needed to navigate
them even harder to access. In addition, to overwhelm health systems, emerging market
governments are confronting capital flight, tens of millions of lost jobs, and oftentimes
cratered economies and unsustainable debt levels.

Article summary
After developed countries hard work & strict lockdown, Covid-19 relatively has come under
control in developed markets, but the virus is remaining a threat in emerging markets, where
uneven governance, weak health systems, dense urban slums, and high rates of poverty
multiply the challenges of fighting the pandemic. This long tail poses an interesting
disadvantage to foreign investors in emerging markets. Today, over-reliance on a local
partner combined with fewer opportunities for direct oversight can result in missed
opportunities, tarnished brands, and greater liability. In one, recent instance, an American
company wrote a letter to a minister of finance in an African government describing how
coronavirus tripped a change in law provision in a Power Purchase Agreement.

Firstly, travel restrictions and limitations may limit investors’ access to first-hand
information. Even as developed countries flatten the curve, travel to developing countries
will likely remain restricted and difficult. As Governments or companies won’t allow it,
there could be local health restrictions or heightened visa requirements, and some regional
airlines have gone bankrupt.

Secondly, emerging market governments may be less able to function efficiently, hampering
investors, and projects. In addition, to overwhelm health systems, these governments are
confronting capital flight, tens of millions of lost jobs, cratered economies, and
unsustainable debt levels. In environments where private investments require consistent
government champions, it's going to be unclear which projects will actually resume and
move forward.

Many of these governments will also be run even less effective as more vulnerable officials
self-isolate and worry about their personal health. Having twice served in the White House.
The author Grant T. Harris witnessed how crisis and its aftermath can overwhelm
governments in developing countries. He also has seen investments stall and money wasted
as companies struggle with limited information or chase after shifting government priorities.

Grant T. Harris suggests investors take a fresh look at your local partners'. If physical
distance forces greater reliance on local partners than would otherwise be ideal, now could
be the time to beef up or refresh training and compliance safeguards. Solid local legal
counsel can also help, if they are good and be another source of market intelligence. He
suggests identifying the government’s current priorities and pivot accordingly. Political
antennae are required to figure out which deals will move forward and which will stall in
this new environment. This may mean more time and attention from C-suites to reach out to
senior government officials or hiring more local staff and consultants who have connections
with governments and can advocate for priority investments, among other steps.
Grant T. Harris suggests keeping in mind the human dimensions of the crisis. Like
everyone, the officials you interact with and your local staff and partners are going to
be worried about their health, their loved ones, and therefore the depression in their
communities and countries. Government officials, regardless of age, will be physically and
emotionally exhausted and under tremendous stress. He suggests going back basics which
can help a lot in this pandemic.
He suggests sending a text to colleagues in the market asking about their health and
families, Investors should also emphasize their commitment to the country and optimism for
its recovery and future economic growth. He says the political risk deck has been reshuffled
the world over. Companies investing in emerging markets especially got to take a fresh
check out the hand they’ve been dealt with. How coronavirus and its immediate aftermath
affect a rustic or company’s outlook will differ, and new risks in some countries are going
to be much more extreme than dated local knowledge or overwhelmed governments. Yet
redoubling efforts now to stay as current and plugged-in as possible will help foreign
investors spot risks and opportunities in these uncertain times.

Conclusion
As parts of Asia and Europe begin to emerge from lockdown restrictions, there are signs of
seemingly permanent changes in consumer behavior. Investors have to start rethinking
where future sources of economic growth will come from & start working on investments in
new areas of future growth, which includes ensuring that small- and medium-sized
companies survive and are functional when economies restart. All of these measures can
help, but it is not going to be enough if investors don’t also start imagining a new path to
recovery.

Understanding from the article

1. Emerging markets already face a twin burden. First, weak health care systems leave many
people with insufficient health care provision and limited access. investors take a fresh look at
your local partners'. So investors take a look at your local partners' to have an idea about
navigation.

2. Most developing economies are unable to afford the vital measures needed to prop up the
economy during difficult times like coronavirus lock-downs, such as payments to furlough
workers or providing loans and support to large industries. As a result, a number of emerging
markets are now facing the possibility of a major debt crisis. For this investors can forecast after
pandemic situations & make pandemic after plans for quick recovery

3. The pandemic could push half a billion additional people into poverty around the world, many
of them in developing countries and emerging markets. But poverty could also impact some
developed economies, as there are plenty of countries where the most vulnerable households
receive insufficient support to keep them from poverty. So in this crisis, everybody has to be
strong enough to fight it.