Global emerging markets’

June turned out to be quite an eventful month, with a multitude of market drivers.

• The speculation of an earlier than expected Fed rate hike had its effect on weakening EM currencies of which Indonesia was one of the main victims.
• Also Greece, the spreading of the MERS virus in Korea (hitting the domestic stocks), elections in Turkey, renewed tensions around Ukraine, and some rate cuts in India, Korea, Russia and China hit the newswires.
• China again took most of the attention, with quite a severe correction on the local A-share markets (margin financing tightening, stimulus uncertainty, IPO wave…) after reaching a peak on June 12, also impacting the Hong Kong listed Chinese stocks.
• In Latin-America, Brazil rose slightly thanks to a rising currency, partly due to the central bank raising its policy rate by 50bp to 13.75% for the fifth consecutive time to the highest level since December 2008, while in the EMEA region South Africa was the only market up.
• Turkish equities initially tumbled after President Erdogan lost his majority in the June general elections but managed to pare losses towards the end of the month.

• Despite some weaker performance (and contribution to performance) of the technology sector and our overweight in China, the fund managed to outperform the benchmark in June. Outperformance was mainly thanks to a positive contribution of the bottom-up selection, especially in Korea and Brazil, showing the better positive contribution, as well as in the industrial and discretionary consumer sectors in general.
• 2015 continues to show a complex environment for emerging markets as, beside external factors (the dollar, oil price, monetary policy in the developed countries, geopolitics), local politics and reforms expectations (not least in China but in other markets as well) will remain critical drivers of divergence in stock markets' performance and earnings expectations.
• We therefore remain prudent in our overall allocations, remaining focused on quality and sustainable growth in our stock selection, while keeping attention to (rotational) risk through a well-diversified and balanced portfolio.