LOOP - Harding Loevner Emerging Markets Equity Composite Q1 2024 Report

2024-05-29 12:00:00 ET

Summary

• Harding Loevner is an investment manager that invests primarily in publicly traded global equities. We were founded in 1989 by former managers for the Rockefeller family. Harding Loevner is a Delaware limited partnership. We operate independently of Affiliated Managers Group.
• The Emerging Markets Equity composite fell 0.1% gross of fees for the quarter, trailing the MSCI Emerging Markets Index, which posted a return of 2.4%.
• Portfolio results were hindered by weak selection effects in Financials, IT, and Health Care, offset by stronger returns in Consumer Discretionary.
• Relative returns in IT were hampered by the strong performance of TSMC; our holding is below the large index weight in accordance with our risk guidelines.

Market Review

China once again weighed on emerging markets (EMs) in the first quarter, as investors continued to be concerned about its ailing economy and geopolitical tensions with the US. Meanwhile, the Federal Reserve’s decision not to cut US interest rates drove up the dollar and shrunk the EM index’s returns in US dollar terms by two percentage points. In the end, the MSCI Emerging Markets Index posted a modest 2% return, seven percentage points behind the developed-market MSCI World Index.

The Biden administration pressured allies in an attempt to squeeze China’s access to semiconductor technology. It asked Japan to deny access to critical chemicals used in chip production and asked the Netherlands (home to semiconductor-equipment manufacturer ASML ( ASML )) to refrain from servicing equipment already sold to Chinese chipmakers. These actions weighed heavily on sentiment toward China’s technology sector. Also, a US Congressional committee introduced the Biosecure Act that seeks to ban US companies that receive federal funds from contracting with “biotechnology companies of concern” based on the risk of ties to China’s military— specifically citing China’s (and the world’s) largest provider of outsourced drug development and manufacturing, WuXi AppTec (WUXIF)(WUXAY)....

For further details see: