Sectors Performance In June - Cons. Discretionary and Industrials At The Top

• In the past few weeks, we have seen that the rise in uncertainty over the Delta variant in addition to the sharp contraction in Chinese liquidity have been weighing on risky assets, especially EM equities.
• Major risk for EM equities in the near term would be further USD strength as growth expectations between the US and the rest of the world starts to diverge significantly.
• This chart ranks all the EM Equity Sectors based on their monthly performance for each month since June 2020.
• As expected, cyclical sectors such as IT, Materials have been the best performers in the past year, up 72% and 66%, respectively, while the EM MSCI index is up 38.4% during that period.
• In June, Real Estate, Materials and Financials have been the worst performing sectors, down 4.2%, 3.3% and 2.6%, respectively, while Consumer Discretionary and Industrials have been the best performers, up 4.5% and 4%, respectively, quickly followed by Energy stocks (+3%).
• We will see how EM sectors will continue to perform over the summer if the uncertainty remains elevated; for instance, flattening curves in EM markets will probably lead to further consolidation in financials stocks.

Source: Bloomberg/MNI