Given the exceptionally strong link between
EM equity performance and flows, we think it plausible that funds are currently withdrawing double that from EM equity (see chart below).
Strong
EM equity performance has largely followed a broad - based earnings recovery over the past 18 months, after earnings of MSCI EM Index companies had slid 7 % a year since 2011.
Not exact matches
The MSCI
EM Index is a free - float - adjusted, market - capitalization - weighted index designed to measure the
equity - market
performance of emerging markets.
While Japan's TOPIX index has turned in a respectable
performance — 10 % in local terms and 15 % in dollar terms —
EM equities have been the standout performer: The MSCI Emerging Market Index is up over 25 % year - to - date.
Investors may want to consider a selective approach to
EM equities given that
performance results have varied widely by country.
However, despite this pick up in appetite and improved
performance more recently, it is important that investors do not lose sight of the fact that
EM equities have still lagged developed markets by more than 50 % over the last five years.
While Japan's TOPIX index has turned in a respectable
performance — 10 % in local terms and 15 % in dollar terms —
EM equities have been the standout performer: The MSCI Emerging Market Index is up over 25 % year - to - date.
May's edition looks at — amongst other things — strong
performance from global
equities (even stronger from
EM), the Russia stand - off, good data from the US, the negative spiral in China's real estate market and European monetary policy.
During this recent market selloff, it might come as a surprise that
EM equities have held up relatively well — actually outperforming U.S.
equities during this leg lower, based on the
performance of the S&P 500 Index and the MSCI Emerging Markets Index from 26 January to 8 February 2018, according to Bloomberg.
Like
EM equities,
EM bonds have experienced outflows and poor
performance due to concerns about the impact of potentially new U.S. trade policies on emerging economies.
Emerging Markets (
EM)-- The MSCI Emerging Markets Index is a free float - adjusted market capitalization index that is designed to measure
equity market
performance of emerging markets.