Geopolitical Uncertainty, USD Strength Leave Equities Vulnerable (2/2)

• At the bottom, we find that consumer discretionary equities continue to remain vulnerable, down over 22% since the start of the year.
• Consumer Discretionary remains the worst performing sector in the past year as consumer confidence indicators continue to stand at 'depressed' levels due to Covid uncertainty and surging inflation.
• Health care and IT sectors have also been performing poorly since the start of the year, both down over 18% in 2022.
  • Consumer Discretionary remains the worst performing sector in the past year as consumer confidence indicators continue to stand at 'depressed' levels due to Covid uncertainty and surging inflation.
  • EM IT equities have been significantly impacted by China crackdowns on tech sector.
• We are leaving the energy sector on the side for now as we are not confident that the performance of the EM energy sub index reflects the performance of the sector given the significant rise in energy this year.
• One explanation could be that all the losses occurred during the start of the Ukraine war, driven by the fall in Russia energy companies. Hence, MSCI new weighing following the collapse of Russian assets did not readjust the February/March losses, therefore the MSCI EM Energy sub-index still remains very low despite the positive bounce in energy stocks in most EM economies.

Source: Bloomberg/MNI