Emerging Markets Performance in Q2

July 11, 2016 |Author: EGA Investment Strategy | Categories: Chart of the Week, Emerging Markets

EM consolidated on gains made in Q1. The MSCI Emerging Markets Index (+0.8%) trailed the MSCI World Index (+1.2%) in Q2 2016. Emerging markets (EM) consolidated on gains made in Q1 and has advanced 6.5% in H1 2016, the best performing region, followed by the S&P 500 Index with a return of 3.8%. Commodity prices continued to rise as central banks continued to remain accommodative. Although investors were spooked by the late June Brexit result in the UK referendum, confidence was quickly regained as central bankers offered liquidity lines to prevent another financial crisis.

Country performance. As it was in Q1 2016, Latin America (+5.4%) led EM whereas Asia (+0.4%) and Europe, Middle East and Africa (EMEA) (-1.1%) lagged. Peru (+18.2%), Brazil (+13.9%), Philippines (+5.5%), Russia (+4.2%) and Indonesia (+3.6%) were the best performing emerging markets in Q2. Poland (-16.8%), Greece (-13.2%), Turkey (-7.5%), Mexico (-6.9%) and Malaysia (-5.7%) were the worst performers.

Sector performance. Sector performance was a mixed bag in Q2. Winners and losers were made up from both cyclical and defensive sectors. Consumer Staples (+4.3%), Technology (+2.6%) and Energy (+1.9%) outperformed the EM benchmark. Industrials (-3.2%), Consumer Discretionary (-1.3%) and Materials (-0.8%) were the biggest underperformers. 

 
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