Monthly Recap: Market and Macro Update
Global markets ended October positively, fueled by indications of stabilising growth and declining inflation, which boosted investor confidence. Central banks, including the Federal Reserve and the European Central Bank, shifted their focus towards preserving growth instead of further tightening monetary policies. Overall liquidity conditions remained supportive, and corporate earnings exceeded expectations. Consequently, investors shifted back to risk assets, with emerging markets leading global performance.
Emerging markets experienced a strong month due to easing global yields, a weaker U.S. dollar, and improved domestic conditions. Inflation pressures have lessened, prompting central banks in Latin America, Eastern Europe, and parts of Asia to transition from tightening to selective easing. Political changes in crucial markets like Argentina and South Africa occurred smoothly, enhancing macro stability. Consequently, there was a widespread rally in EM equities and bonds, driven by increased confidence in the longevity of the global economic cycle.
In Asia, policy acted as a stabilising force, with India maintaining steady rates amidst 7% growth and contained inflation. Investor sentiment improved after a period of consolidation. China’s policymakers adopted a balanced approach to fiscal and monetary support, aimed at property and manufacturing without inciting a credit surge. Southeast Asia benefitted from decreased food and energy costs, currency stability, and political calm, which promoted capital inflows. The region remains the primary engine of global demand, increasingly driven by domestic consumption rather than external factors.
Outside Asia, Latin America remained the standout. Brazil extended its rate-cutting cycle as inflation neared target and fiscal dynamics improved, while Mexico maintained policy restraint ahead of 2026 elections to safeguard credibility. In October, investors observed a consistent trend with Asian leadership and Latin American resilience, signaling a more sustainable phase for emerging markets (EM). As global policy rates peak and inflation declines, the dollar weakens, allowing EM assets to return as a source of growth and diversification. The year-end outlook is positive, based on improving fundamentals and a stable policy environment, though not overly optimistic.
Performance & Attribution
The Fund increased by 3.43% in October, boosted by strong performances in North Asia and steady results in India and parts of ASEAN, particularly in Korea and Taiwan, due to the ongoing strength of AI hardware and electrification. This growth outweighed weaknesses in China’s consumer and technology sectors and a slowdown in Brazilian retail.
Korea emerged as the leading contributor, with the Fund experiencing significant gains from the AI and industrial upgrading themes, notably propelled by SK Hynix, HD Hyundai Electric, and Doosan Enerbility. These companies exemplified Korea’s growing influence in the global technology and power-equipment supply chain, while broader industrial holdings like Hyundai Marine and Mipo Dockyard profited from strong export demand and increased capital expenditures.
Taiwan’s performance was bolstered by the semiconductor and electronics sectors, with TSMC notably contributing over one percentage point to overall returns due to its leadership in advanced chip fabrication. Companies within the ecosystem, including Hon Hai, Wiwynn, Elite Material, Tripod, and Asia Vital Components, significantly advanced, benefiting from ongoing AI-related demand and data-centre spending.
India’s financial sector, led by Federal Bank, HDFC Bank, and State Bank of India, drove broad-based gains thanks to strong credit growth and asset quality. Larsen & Toubro in Industrials, along with selected healthcare and consumer stocks, provided additional support. India’s growth is predominantly based on domestic resilience and earnings diversity instead of short-term cyclical factors.
China negatively impacted performance, lowering total returns by almost two percentage points, particularly in the consumer and technology sectors, including companies like Inspur Digital and Anta Sports. These declines stemmed from weak retail sentiment and uncertainty about policy support. Although companies such as Guoquan Food showed resilience within targeted consumer niches, the overall trend was dominated by significant weaknesses in discretionary and online markets.
Brazil experienced slight negativity in retail and staples sectors with Magazine Luiza and Sendas Distribuidora facing selling pressure, although gains were noted in Gerdau, VALE, and Log-In Logistica. Positive contributions were also reported from Indonesia with strong performance in staples like Bumitama Agri and Cisarua Dairy, and from Malaysia, where technology-related companies such as Vitrox, Inari, and Pentamaster benefitted from improving export momentum.
Overall, the month’s outcome highlighted the portfolio’s strengths in technology and industrial leadership in North Asia, alongside steady growth in India’s domestic sectors. Weaknesses were noted in the Chinese consumer and platform names, prompting a focus on companies with defensible brands, enhancing governance, and visible earnings recovery.
As the global cycle matures, the Fund is focused on regions and sectors exhibiting structural growth and policy flexibility, which differentiate Emerging Markets amid slowing yet resilient global growth.
