SCCO - Harding Loevner Frontier Emerging Markets Equity Composite Q1 2024 Report

2024-05-29 11:55:00 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 Frontier Emerging Markets Equity composite rose 7.6% gross of fees in the quarter, outperforming the MSCI Frontier Emerging Markets Index’s gain of 5.7%.
• A common misconception about the United Arab Emirates (‘UAE’) is that its US$415 billion economy is dependent on oil production, when in reality, it has one of the most diversified economies among the Gulf States.
• This quarter, we made a few adjustments to ourportfolio in response to policy changes made by governments in Nigeria andBangladesh.

Market Review

Frontier Emerging Markets ('FEM') continued their positive momentum in the first quarter of 2024, gaining 6% as inflationary pressures receded across most FEM countries, which helped set the stage for an easing of monetary policies. The rally was broad-based across every region except Africa, which was dragged down by weak currencies in Egypt and Nigeria.

Latin America led gains, due to rallies in Colombia and Peru. Both countries preceded the US in cutting interest rates, just as they were ahead of the curve in tightening monetary policy in late 2021, months ahead of the US Federal Reserve’s interest rate hikes in March 2022. So far, Colombia has cut its central bank policy rate three times by a cumulative 100 basis points ('BPS') since December 2023. Peru has cut its policy rate six times since September 2023 by a cumulative level of 150 bps. These cuts have led to a better environment for equities by reducing the discount rate used to value future cash flows....

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