**Emerging Markets Quarterly Review**
The second quarter saw a mixed bag for emerging market equities, with Asia and EMEA (Europe, Middle East, and Africa) posting gains, while Latin America declined. In Asia, China’s economy continued its slow and uneven recovery, but the country’s stocks rebounded nonetheless. India’s Prime Minister Narendra Modi secured a third term in office, although his party lost its majority in parliament.
In EMEA, the prospects for a ceasefire between Israel and Hamas remained elusive. Meanwhile, Brazil’s central bank cut interest rates by 25 basis points in May, a smaller decrease than previous cuts. In Mexico, the stock market fell, and the peso plummeted after the election of president-elect Claudia Sheinbaum and the ruling Morena party’s supermajority win in Congress.
The MSCI Emerging Markets Index Net returned 5.0% for the quarter, with eight out of 11 sectors rising. Information technology and communication services led the way, while healthcare and consumer staples lagged behind.
The top ten holdings in the index included Taiwan Semiconductor Manufacturing Co. Ltd., Tencent Holdings Ltd., and Samsung Electronics Co. Ltd., among others. These companies accounted for 28.42% of the portfolio.
Investors should be aware of the risks associated with emerging markets, including currency fluctuations, political and economic instability, and regulatory changes. Additionally, small- and mid-cap securities can be more volatile than large-cap securities, and sector-specific investments can increase risk. It’s essential to carefully consider a fund’s investment objectives, risks, charges, and expenses before investing.
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