The acceleration in emerging market coronavirus infections relative to developed countries is beginning to weigh on EM equities.

After holding steady for much of the summer against developed peers, average daily cases in nine emerging markets — including India, Brazil and Russia — jumped higher again from late July, according to data compiled by Bloomberg. Since the end of that month, the MSCI Emerging Markets Index has lagged the MSCI World Index of developed market shares by almost 3 percentage points.

“Emerging markets have yet to see infections topping out, whereas the focus is shifting in developed nations to post-pandemic economic measures,” said Kota Hirayama, a senior emerging market economist at SMBC Nikko Securities Inc. in Tokyo. Emerging market economies are more susceptible to downward pressures from the pandemic, so overseas investors are hesitant to invest.

Among the 10 countries that have the highest number of confirmed coronavirus cases, eight are emerging economies, including India and Brazil. Compared with advanced economies, emerging market economic activity has fallen faster and deeper as the Covid-19 shock hit, according to Bloomberg Economics.

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