Emerging Markets

The global economy continued to slow during the third quarter, as trade tensions remained high and geopolitical risks escalated.  With limited prospects for a comprehensive trade deal and reacceleration in global trade, emerging market policy makers have been pulling the traditional policy levers to confront stagnating growth.  A moderating inflation outlook lowers the risk of capital outflows and downward currency pressure, allowing central banks to join the synchronized monetary easing well underway in the developed world.  Manageable government deficits have also cleared the way for more

The Perterra Emerging Markets Fund, LP declined 0.8% in the second quarter, compared to the +0.6% return by the MSCI Emerging Market Index in U.S. dollars.  This virtually flat performance of the index came despite the uncertainty caused by the escalating trade war between the U.S. and China, general elections in India and Indonesia, and the passage of a critical social security reform bill pending in Brazil.  This uncertainty exacerbated the fact that the global economy appears to be entering a period of decelerating growth and synchronized policy easing.

Equity markets rebounded during the first quarter, reacting favorably to U.S Federal Reserve’s shift to more accommodative policies and improving confidence on the U.S.-China trade negotiations.  Central banks turned dovish in response to tightening financial conditions and slowing global growth.  China’s reaccelerated fiscal stimulus and progress on the trade talks alleviated concerns surrounding its economic slowdown.  Emerging market equities reacted favorably, gaining 9.9% in U.S.

The fourth quarter was very difficult for global markets, as prices for most risk asset classes experienced elevated volatility.  Investors in emerging markets were faced with shifting growth and risk dynamics due to several macro factors, including an unclear endgame for the U.S./China trade war, decelerating U.S.

The MSCI Emerging Markets Index declined 1.1% as tightening monetary conditions in the U.S., the strong U.S. dollar, political uncertainty, escalating trade tensions, rising inflationary worries, and fund outflows weighed on performance.  The Perterra Emerging Markets Fund, L.P.

The Altrinsic Emerging Markets Equity portfolio delivered a -5.4% return during the second quarter, outperforming the 8.0% decline by the MSCI Emerging Markets Index as measured in U.S. dollars.  Rising U.S.

Volatility returned in the first quarter as investors reassessed the potential impact of rising interest rates, the reversal of quantitative easing (QE), and the increasing trade tensions between the U.S. and China.  The Perterra Emerging Markets Fund, LP was down 2.7% during the quarter, while the MSCI Emerging Markets Index gained 1.4%, as measured in U.S.

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World markets registered another quarter of strong returns against a backdrop of synchronized global growth, resilient manufacturing and services activity in China, and a potentially stimulative tax reform package in the U.S.  Gains were broad based across asset classes, including emerging markets which gained 7.4%. 

Absolute returns have been strong, but it has been difficult for those of us applying a value discipline to outpace the MSCI Emerging Markets Index, in which the largest constituents and leading performers are a concentrated group of highly valued growth stocks.  

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Emerging markets continued their rally during the third quarter, extending the asset class’ year-to-date return to 28%.  The driving forces behind the market have remained fairly constant through much of the year, including synchronized global economic growth, a benign inflation environment, continued unorthodox central bank policies, supportive capital flows, and increased confidence in China’s reform efforts.  Market leadership continues to be very narrow, concentrated in a handful of large-cap technology stocks and the Chinese real estate and automobile sectors.  Embedded in these consen

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The Altrinsic Emerging Markets Portfolio gained 6.0% during the second quarter in U.S. dollars.  By comparison, the MSCI Emerging Markets Index rose 6.3%.  Markets benefited from synchronized, albeit modest, global economic growth, strengthening Chinese consumer spending, earnings expectations, and positive portfolio flows into the asset class.  A fresh wave of corruption allegations in Brazil and escalating tensions involving North Korea impacted local markets but seemed to be shrugged off by the broader emerging markets.

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