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  • Flattening yield curves in addition to rising USD amid the recent surge in uncertainty over the Delta variant have been weighing on EM Financial Stocks since the beginning of June.
  • In addition, we previously saw that the sharp fall in Chinese real money growth has also been one of the major factors behind the weak performance in Financials; China real M1 money growth tend to lead cyclical stocks (i.e. financials) by 6 months.
  • Next key support on MSCI EM Financials (MXEF0FN Index) stands at 323, which represents the 200DMA SMA and the 23.6% Fibo retracement of the 223.80 – 354.74 range. A break below that level would open the door for a move down to 310 (LT upward trending support line).

Source: Bloomberg/MNI