Emerging markets in the spotlight: South Africa, India and China
Emerging markets, along with European equities, are among the assets that have benefited most from the difficult moment of so-called US exceptionalism. Looking for viable alternatives, investors have set their eyes on a market with a P/E of 14.4, more than ten points lower than the US, and which may be a prime market to escape US tariffs.
The chart of the relative strength indicator between emerging and world equities shows the recovery of the former since the beginning of the year. With the moving averages at 50 and 200 returning close to an upward cross.
South African equities have been particularly strong, up around 14% year-to-date and continuing to outperform the MSCI Emerging Markets Index (chart above).
The story is somewhat different in India, where the stock market has underperformed the MSCI Emerging since the middle of last year. On an annualised basis, it is down more than 1%, although there have been signs of a recovery in recent weeks on the back of still robust growth and a somewhat less restrictive monetary policy.
Chinese equities, on the other hand, continue to show strength relative to the emerging market index, even though the risks from US tariffs have been felt in recent weeks. The MSCI China index has gained more than 17 percentage points over the past year, the best performance of the three indices tracked, and the strength ratio remains on the upside.
