EM MARKETS WRAPS - COMPENDIUM

Research evidence excerpt

EM MARKETS WRAPS - COMPENDIUM

Global Markets Strategy

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EM Markets Wraps - Compendium 04 August 2026

Emerging Markets Equity Strategy (Rajiv Batra/Emy Shayo Cherman/Anindita Gandhi)

July 2026 Wrap – Seeing through the tail end of tech deleveraging; Geopolitical headwinds re-

escalate

MSCI EM posted another monthly decline in July (-3.3%, -1.7% in June), underperforming flattish returns in S&P500 (-

0.1%) as well as DM (+0.5%). The most major drag to performance was from an unwind of the AI/Tech complex concentrated in

South Korea and to a lesser extent in Taiwan. The pulback was driven by renewed fundamental concerns such as the continuity

of AI capex, financing and monetization challenges, and competition from China. But the resultant wobble in AI stocks was

amplified by an intense positioning unwind (including from equity hedge funds and leveraged ETFs in Korea). Towards the end

of the month, it appeared that the de-leveraging in Korea had run its course , resulting in a sharp rally on the last day. Another

notable headwind was from a re-escalation of conflict in the Middle East that effectively ended the ceasefire agreed upon in

June, and the disruption was compounded by a blockade in the Red Sea.

Asia Pacific Monthly Wrap (Rajiv Batra/Mixo Das/Joy Wang)

July 2026: De-leveraging in AI stocks drives sector/market/factor rotation

MSCI Asia Pacific and MXASJ fell only 1.3% and 3.2% over the month, respectively, but this hides substantial intra-month