by Eric Anderson, Head of Global Wealth Solutions
April marked a significant turning point for global markets, focusing on emerging economies in a changing macroeconomic landscape. President Trump’s new “Freedom Day” policy showed a shift toward economic nationalism and a retreat from globalization. The flat 10% tariff on global imports and 125% duties on Chinese electronics triggered reactions in trade, capital flows, and investor sentiment.
The immediate consequence was a sharp deterioration in U.S.-China relations. China responded by imposing 34% tariffs on American imports and suspending high-profile corporate transactions, including the proposed TikTok divestiture. These moves pressured regional currencies, particularly in Asia, and weighed on cross-border investment flows. The renminbi fell to its lowest level against the euro in more than a decade. In response, the People’s Bank of China injected liquidity into the banking system and signaled potential rate adjustments. Despite these interventions, offshore borrowing costs for the yuan spiked, and concerns over capital flight resurfaced. However, late-month gains in Chinese equities suggested some investor confidence in Beijing’s policy response, particularly in sectors benefiting from credit expansion and state support.
In Asia, trade policy uncertainty was worsened by local issues. In Thailand, an earthquake disrupted tourism during low Chinese demand, leading to rate cut talks and a weaker baht. India remained strong, with structural reforms and a stronger rupee from foreign investments.
Japan, China, and South Korea restarted economic talks after five years, aiming to boost regional cooperation amidst changing global trade. In Latin America, Brazil saw a 5. 1% gain due to strong demand for commodities, while Argentina’s aggressive economic changes under President Javier Milei received mixed responses. In Chile, debates over lithium policy could affect the electric vehicle supply chain.
Despite the escalation in trade friction, emerging markets saw positive returns in April. The MSCI Emerging Markets Index rose 1. 3%, driven by strong performances in Brazil and India. However, China’s equity rally slowed due to increased tariffs and cautious investors. Mid-month, over $1 billion flowed into EM equity funds in the last week of April. The MSCI EM Currency Index was flat overall, with mixed performances; the rupee and won strengthened, while the yuan and baht weakened.
Commodity markets were mixed. Oil prices fell nearly 20%, affecting energy exporters like Iraq and Nigeria. While the energy sector struggled, gold and Bitcoin rose due to geopolitical tensions and hopes for U.S. rate cuts. The U.S. dollar dropped 4. 6%, aiding EM assets.
By month-end, global investor focus had clearly shifted from inflation to growth risks. For emerging markets, this means the weak dollar and lower rates are helpful, but declining global trade and supply chain changes present challenges. EMs must adapt through flexible policies, boosting domestic demand, and regional cooperation.
Performance Attribution – Milltrust Global Emerging Markets
The Milltrust Global Emerging Markets Fund delivered a total return of 1.36% in April (this is the return from March 28th to April 30th as March 31st was a holiday for the Fund). The portfolio benefited from a strong stock selection, especially in South Korea, Brazil, and India.
South Korea was the biggest contributor, adding 1.20%, with gains in industrials and health care driven by specific companies.
Brazil contributed 1.16% to the monthly return, with strong performances from Cogna Educação, Localiza Rent a Car, and Sendas Distribuidora. Petrobras holdings detracted due to weaker energy prices, but gains in discretionary and staples sectors reflected improving consumer sentiment and stock-specific catalysts.
India added 0. 63% to overall performance, led by financials, health care, and consumer discretionary sectors. Key contributors were Dixon Technologies, SBI Life Insurance, and Sun Pharma. This shows ongoing investor confidence in India’s growth and the fund’s market opportunities.
China had a mixed outcome. Positive contributions were overshadowed by selection issues in consumer discretionary and financials. Losses from Goodbaby International and LexinFintech countered gains from Newborn Town and Inspur Digital. Technology remained stable, and the fund’s focus on communication services and certain consumer staples balanced out weakness from tariff worries and yuan stability concerns.
Performance from Taiwan, Malaysia, and the Philippines was positive but smaller in scale. Taiwan’s technology exposure added value through TSMC and Wiwynn, but weaker returns from smaller IT holdings reduced the overall impact. In Malaysia, gains came from materials and utilities stocks like Malayan Cement and YTL Power. The Philippines contributed through financial holdings, especially BDO Unibank.
Industrials, consumer discretionary, and health care made the strongest contributions, with key stock selection in South Korea and Brazil. In contrast, energy and some Chinese consumer and financial sectors detracted.
Currency effects were neutral overall, with a weaker U. S. dollar’s impact offset across regions. The fund’s overweight in local-currency assets in Brazil and India helped mitigate currency movement headwinds in China and Thailand.
Overall, the portfolio benefited from its diversified positioning, active stock selection, and exposure to markets with resilient domestic drivers. While macro volatility remains elevated, especially in relation to U.S. trade policy and global rate expectations, the fund’s emphasis on bottom-up fundamentals and multi-country diversification helped drive performance during a complex month.
