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Reporting on key macro data at the time of release.
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Real-time insight of emerging markets in CEMEA, Asia and LatAm region
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- As the inflationary pressures continue to intensify in EM market (i.e. CEEMEA, Brazil), cyclical sectors such as energy and materials could continue to outperform while price volatility in the IT sector could increase significantly.
- The table below shows the average 12M USD excess return (relative the MSCI EM) during periods of rising inflation for all the sectors for EM economy.
- Rising inflation refers to positive 12-month change in EM weighted inflation.
- Interestingly, Brazil and Russia are among the best performing markets (with Thailand and Indonesia) in periods of rising prices, two economies where central banks were 'pushed' to hike interest rates this year in order to counter the rising inflationary forces (CBR hiked by 75bps and BCB by 150bps).
- On the other hand, Taiwan and S. Korea (tech heavy) equity sectors tend to perform poorly.
- As a reminder, if we look at the performance of global equity sectors in the past 30 years, equities tend to perform the worst in periods of accelerating inflation (Delta change in inflation rate) and decelerating economic activity.