Emerging markets showed an impressive recovery since the panic selling in March. However, the cross-border inflows by foreign investors have not yet made up for the outflows earlier in the year. The pandemic also led to extensive new borrowing. Moody’s expects the ratio of debt to GDP in the 19 biggest emerging markets to rise by an average of 10% this year alone. We see three countries where the rise in sovereign debt is particularly worrying: Brazil, South Africa and India. We see potential in the Asian countries that are handling the pandemic successfully. In particular, China with its strong domestic market has potential. Should the US ease their hard line on trade, there might be improved potential for countries in Central America. While Mexico is still suffering from the pandemic and refuses to use fiscal stimulus to support the economy, it has strong foreign currency reserves, robust fiscal headroom, ample access to liquidity and low foreign currency debt.