2020 has been largely about the pandemic and its derivatives. Uncertainty of the timing and contours of normalisation in industries, economies, and countries has resulted in reflexive efforts to embrace ‘certainty’ in 2020. Growth stocks have been clear beneficiaries of the two big trends in financial markets under Covid-19 – negative real rates and great economic uncertainty.

These twin forces have made extrapolation of the future incredibly challenging for investors, leading to a relentless search for certainty in obvious ‘digital’ winners.  Add to that a powerful case of FOMO (fear of missing out) and you have the ingredients for worrying levels of concentration and pockets of structurally overvalued companies.

Emerging market (EM) growth stocks have had an unprecedented run versus value over the past decade. The pandemic has amplified the run of growth stocks and, in our view, led to pockets of excessive valuation. Covid-19 has essentially amplified trends that were already underway in emerging markets and accelerated the prospects of e-commerce, fintech, food delivery, ride-hailing, gaming, cloud, and other similar digitally driven companies.

In many cases, the assumptions of what these disruptive growth companies can deliver and the valuations they have reached have become untethered from reality, in our view.

https://www.invesco.com/apac/en/institutional/insights/market-outlook/2021-investment-outlook-identifying-sustainable-growth-businesses-in-emerging-markets.html