The slow vaccine rollout in the developing world is holding back emerging-market stocks: The gap between developed and emerging markets is widening as the covid-19 pandemic continues to rage in the global south. As stocks in advanced economies go from strength to strength, EM equity funds had their worst week in more than three months last week, with investors pulling USD 1.3 bn on fears that vaccine shortages will hold back economic growth, according to Bloomberg. Equity funds in India, which has been especially hard hit by the latest wave of the virus, witnessed their largest outflows in more than a year.

It’s not just the pandemic that’s hitting investor sentiment: “Not only do we have a much slower vaccination program across emerging markets, but worries over debt loads, external vulnerabilities, fiscal prudence, inflation and currency stability will hamper a much stronger recovery post-pandemic,” said Mohammed Elmi, a portfolio manager at Federated Hermes.

Tearing up the rulebook: Conventional wisdom says that emerging markets offer investors an easy path to solid returns during global expansion, but this time it is the developed economies experiencing the strongest growth. JPMorgan said last week that the US economy will outperform EM at an “unprecedented” rate this quarter due to the weak vaccine rollout. This disparity is being reflected in developed v emerging stocks: the MSCI emerging-market index has risen less than 5% in 2021, half that of the MSCI’s gauge of developed market stocks.

The EGX30 fell 0.7% yesterday on turnover of EGP 985 mn (23.5% below the 90-day average). Regional investors were net sellers. The index is down 3.0% YTD.

In the green: Qalaa Holdings (+2.0%), Eastern Co. (+1.6%) and ElSewedy Electric (+1.1%).

In the red: Oriental Weavers (-16.2%), Telecom Egypt (-6.1%) and MM Group (-3.4%).