GEMS Commentary – November 2025
November was characterised by a pause in global markets, as risk assets entered a consolidation phase after a robust year. The discussions surrounding a possible interest rate cut by the Federal Reserve in December influenced market sentiment more than the actual economic data. In developed markets, US economic indicators were mostly unimpactful, Europe remained on the verge of stagnation, and although Japan’s fiscal initiatives attracted attention, their immediate effects were limited. The bond market displayed stability, gold continued its impressive upward trend, and market volatility increased only slightly.
Against the backdrop of global growth dynamics, Emerging Markets played a crucial role, particularly Asia, which remained the anchor of growth despite a more nuanced tone observed throughout the month. India and the major ASEAN economies displayed strong domestic momentum, bolstered by resilient consumption and investment efforts aligned with supply-chain diversification. However, by the month’s end, the more trade-sensitive areas of the region experienced a slight decline in export orders and manufacturing output. While the electronics sector continued to provide support, its growth was no longer accelerating. Inflation levels in EM Asia remained stable, allowing policymakers the flexibility to either maintain current policies or consider gradual easing as 2026 approaches.
China emerged as a significant source of emerging market (EM) uncertainty in November. Although industrial production data showed slight improvement, retail sales declined following a robust October, and the property sector continued to dampen confidence with weak new starts, sales, and financing. The crucial aspect was the policy response from Beijing, which increased fiscal support by expanding the sovereign bond programme, implementing gradual property easing in major cities, and injecting targeted liquidity through the People’s Bank of China (PBoC). While these measures did not constitute a dramatic stimulus shift, collectively they established a policy floor, highlighting the necessity for more direct support for domestic demand as the nation approaches 2026. This blend of limited improvement and fragile sentiment contributed to China exerting late-month pressure on EM indices.
Latin America delivered a very different picture, with Brazil once again emerging as one of the global standouts. A combination of policy credibility, falling inflation and commodity support helped propel another month of strong performance, extending what has already been an exceptional year. Elsewhere across EM, the combination of softer global activity, earlier tightening in financial conditions and idiosyncratic political dynamics kept performance more uneven and highly stock-specific.
Performance & Attribution
Within this environment, the Fund declined by around 1.8% in November, compared with a roughly 2.4% fall in the broader Emerging Markets index. Stock selection dominated the return profile. Strong gains in Brazil, parts of India and the EM consumer/healthcare complex were offset by weakness in China, Taiwan, South Korea and selected technology and industrial names, particularly those that had been among the bigger winners earlier in the year. Brazil was the clear bright spot in November, contributing just over +1% to performance. Strength was broad-based, with domestic cyclicals, retail, and industrials all moving higher as Brazil’s macro backdrop continued to stabilise. Consumer and services names performed particularly well, supported by improving sentiment and healthy earnings delivery.
India also made a modest positive contribution. Financials and healthcare were the main drivers, benefiting from solid credit demand, resilient household balance sheets and strong execution across core holdings. These gains were partly offset by weakness in selected consumer staples and “new-economy” names, where investors rotated back toward more established franchises.
The largest economic drags originated from China, Taiwan, South Korea, and Malaysia. China contributed to a 0.8% decline due to mixed data and fragile sentiment, resulting in a two-speed market; consumer and travel sectors performed well while declines in internet, property services, fintech, and certain industrial and tech sectors outweighed the positives. Although policy support is increasingly apparent, investor caution persists regarding near-term earnings expectations.
Taiwan experienced a mixed performance in the stock market, showcasing strong results in AI-linked components and testing equipment, yet it recorded a modest net loss as profit-taking affected larger hardware and semiconductor companies following a period of significant growth. In contrast, South Korea was the largest detractor, declining approximately 1.8%. The sectors of defence, shipbuilding, and industrial holdings, which had previously contributed positively, faced a sharp downturn as the market reassessed the short-term order visibility and recalibrated expectations for 2025 earnings. Furthermore, certain semiconductor stocks declined as the outlook for the memory cycle became more uncertain.
Overall, the analysis of November’s performance in emerging markets (EM) reveals a mixed picture. Strength observed in Brazil and certain regions of India provided essential support, while challenges arose from China’s inconsistent recovery, profit-taking in Taiwan following AI advancements, and a decline in Korea’s industrial sector. The market is increasingly favouring careful stock selection over generalised EM exposure. As we move into year-end, the Fund remains positioned to capture the deeper structural growth trends across EM while navigating what is likely to remain a more idiosyncratic and stock-driven market environment.
