Emerging markets on stage: A performance review

Emerging markets on stage: A performance review

Subtitle: This blog explores the intricate dynamics of these indices, analysing historical trends, influential factors, and current developments, providing valuable insights for those navigating the exciting yet complex terrain of emerging market investments.

In today’s global economy, emerging markets play a pivotal role in shaping investment landscapes. As investors seek diversification and high potential returns, the performance of emerging market indices becomes a focal point.

MSCI Insights

The MSCI Emerging Markets Index captures large and mid-cap representation across 24 Emerging Markets (EM) countries. With 1,437 constituents, the index covers approximately 85% of the free float-adjusted market capitalization in each country.

Source: MSCI

Performance

Source: MSCI

Country Weightage

The pie chart shows the weights of different countries in the world. China has the highest weight of 29.89% followed by India (15.88%), Taiwan (15.07%), Brazil (5.42%), South Korea (11.78%), and others (21.97%).

Source: MSCI

Sectoral Allocation

Source: MSCI

The MSCI posted a solid 6% return over the past year, showcasing resilience in dynamic markets. However, FYTD reflects a slight downturn at -0.49%, emphasizing the index’s responsiveness to short-term fluctuations. These figures offer investors key insights into the MSCI’s recent performance.

Factors Influencing Performance

The MSCI Emerging Market Index’s underperformance is notably attributed to China, constituting nearly 30% of the index. China’s subpar performance directly impacts the overall index, contributing to its diminished returns.

Top 5 Countries Index Performance

China

India

Brazil

South Korea

Mexico

Within the leading emerging markets, only India and Brazil have posted positive returns, contrasting with the relatively stagnant or negative performance of other major economies. This disparity underscores the significant influence a select group of nations wields on the index.

Encouragingly, if China’s performance strengthens then it signals a positive trajectory for the MSCI Emerging Market Index.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.