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Emerging market equities’ storming performance in third quarter

Global_emerging_marketsNearly 100% of managers achieved positive returns in the emerging market equity universe in the third quarter of this year, powered by dollar weakness, rising commodity prices and Chinese economic momentum, research has found.

Data analysis firm Camradata’s third quarter investment research report found that the lowest return produced was -3.89% and the best performing product achieved 15.44%, giving a spread of over 19.33% between the top and bottom performer in just one quarter.

By the end of the third quarter assets under management (AuM) in emerging market equity products had soared by $41.5 billion (€35.3 billion) since the previous quarter.

Over a three-year period, nearly 99% of managers achieved a breakeven or positive return in the asset class.

Stable global growth helped UK equities in the third quarter of 2017 but uncertainty about Brexit and a hawkish tone from the Bank of England meant returns lagged global equities.

Economic data in Europe was healthy with GDP growth of 2.3% in the second quarter and many companies reported better than expected earnings growth. Eurozone stocks advanced over the quarter as key economic indicators continued to improve and diminishing political uncertainty comforted investors.

The report also found:

  • Global equities performed well in Q3 and stocks rose amid a brighter outlook for the global economy backed by better than expected corporate earnings, plus several key market indices reached record highs during the quarter.
  • AuM in UK equity products fell by £3.66 billion (€4.1 billion) since the second quarter. The asset class continued to see outflows this quarter with another £5.2 billion having been withdrawn. In fact, taking into account all of the products the UK equity asset class has seen outflows of assets in each of the past 12 quarters.
  • AuM in the emerging market debt universe reached $268.8 billion by  September 30, 2017, meaning its assets increased by almost $20.4 billion since Q2 2017.

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