Market Musings 050524: The EMpire Strikes Back
Market Musings 050524: The EMpire Strikes Back
I want to talk today about emerging markets, which have been out of favour for quite some time now. They've underperformed developed markets by a wide margin for a long time, but may finally be becoming more interesting. We can first of all divide the investable public stock universe for the most part into four segments, three segments being developed markets:US at 63%, Europe at over 17%, including the Eurozone UK, Switzerland and Sweden, Japan at over 5%
and then a fourth segment, which are emerging markets representing about 10%, if we look at the MSCI All-Country World Index, which is the industry standard.
Since 2020, performance has generally been strong for most stock markets, led by the US at plus 70% in Euro terms since the beginning of 2020, the Euro STOXX 50 +48%, the UK +25%, Japan +28%, or +71%, if you'd hedged your exposure to the yen.
But Emerging Markets at only +8% since 2020 have really done extremely little and been a dramatic underperformer relative to developed markets.
However, the story is a little bit different looking year to date. Here we have US +12% in...