EPAM - Harding Loevner Emerging Markets Equity Q4 2024 Report

2025-02-18 07:10:00 ET

Summary

• Emerging markets saw an 8% gain in 2024, despite a sharp 8% decline in Q4 due to Trump's election and trade policy concerns.
• China's 20% rebound was driven by a major stimulus package, despite social instability and policy uncertainty.
• Taiwan's tech sector thrived with a 35% gain, while South Korea and Latin America underperformed due to political turmoil and economic challenges.
• EM companies are adapting to global trade shifts, leveraging AI and diversified supply chains, offering compelling long-term growth and valuation opportunities.

Market Review

Emerging markets (EMs) were having a fine 2024 for most of the year. Investors were emboldened by improving growth prospects and falling interest rates, surging growth in artificial intelligence, and a rebound in China, with equities rising from inexpensive valuations. That changed in the fourth quarter. Donald Trump’s election focused attention on both the prospects of significant changes in US policies affecting trade and also the inflationary outlook, with interest rates potentially remaining higher for longer, as the Federal Reserve hinted in its December meeting. After falling 8% in the final quarter, EMs ended 2024 up 8%. While they outperformed developed markets outside of the US (the MSCI World ex US was up 5%), both lagged the US, the star of the year (the MSCI USA Index was up 25%), in part as the dollar strengthened 9% on a trade-weighted basis.

MSCI EM Index Performance (USD %)

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