Emerging market stock exchanges show an outperformance in September 2020 – Commerzbank column

After the emerging market stock exchanges reported an underperformance against both the MSCI Developed Market Index and the MSCI World Index in August 2020, the trend was reversed again in September 2020. In the month under review, the MSCI EM Index lost only 1.8%, while the MSCI Developed Markets Index fell by 3.6% and the MSCI World Index by 3.4%. From January to September 2020, the underperformance of the EM (-2.9%) against the MSCI World Index (+/- 0.0%) decreased again somewhat.

The reason for the outperformance of EM equities was primarily the relatively good performance in the Asia exJapan region (-1.7%), which again affected the EMEA (-2.7%) and Latin America (-5.5%) regions. left behind. Above all, the technology-heavy stock exchanges in South Korea (+ 2.9%) and Taiwan (+ 1.8%) were firm. The stock exchange in India (+ 0.6%) also showed a positive trend due to the popular software sector (+ 10.1%). The MSCI China Index, on the other hand, lost 2.9%. Concerns about a possible break in the so-called phase 1 deal between the USA and China weighed on the problem. Worldwide, above all the topics of the US election, rising Covid-19 numbers and declining US stimuli for headwinds.

The EM corporate earnings estimates for 2020/2021 were revised upwards by 0.8% and downwards by 0.4% in September 2020. On a regional basis, the largest positive earnings revisions were for the Latin America region (+ 9.1%). EM equity funds saw net inflows of USD 689 million in September 2020 (as of September 23). In the past nine months (January to September), foreign investors sold emerging market stocks for a net $ 46.4 billion. We still recommend a neutral weighting of EM stocks within our regional ranking.


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