2024-08-29 00:50:00 ET
Summary
- The International Equity composite rose 0.4% gross of fees in the quarter, not far behind the 1.2% gain for the MSCI All Country World ex US Index.
- International equity markets showed mixed performance, with strong gains in IT and semiconductors offsetting declines in other sectors and regions.
- Divergent monetary policies and political events, especially in Europe and emerging markets, introduced volatility, affecting market performance and investor sentiment.
- M&A activity is increasing, driven by optimistic management teams, but caution is advised due to integration challenges and execution risks.
- Financial holdings are exposed to emerging markets, offering growth opportunities but also heightened country risks, with a focus on strong balance sheets and geographic diversification.
Market Review
International equity markets inched higher this quarter, masking significant underlying divergence between sectors, as good returns in Information Technology, especially within the semiconductor industry, balanced out declines in other sectors.
Monetary policies continued to diverge in developed markets. The US Federal Reserve maintained the federal funds rate within the range of 5.25% and 5.5%, reflecting a cautious stance aimed at containing inflation while supporting growth. Despite earlier forecasts suggesting multiple rate cuts, markets are now pricing in just two rate cuts in 2024. Similarly, the Bank of Japan kept rates stable but further reduced its bond purchases; Governor Kazuo Ueda indicated that further rate hikes remain a possibility despite signs of economic weakness, including weak private consumption and rising living costs. In contrast, the European Central Bank lowered its key rate to 3.75% from 4%, making its first cut since 2019, even as wage cost pressures persist....
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For further details see:
Harding Loevner International Equity Q2 2024 Report
