Latin America stood out as one of the key drivers of EM outperformance. The MSCI Latin America Index gained 6.1% during the month, outperforming broader EM and DM indices. For the first half of the year, the index has surged by 29.0%, with Colombia, Mexico, Chile, and Brazil contributing significantly to growth.  

In Brazil, inflation remained above the central bank’s target, rising to 5.35% in June, despite a temporary slowdown in April and May. In response to persistent inflationary pressures, the central bank raised the benchmark Selic rate by 25 basis points to 15% in June. The monetary policy committee voted unanimously in favour of the hike, signalling that the aggressive tightening cycle may be nearing its end.   

Asian markets delivered mixed results, with Taiwan recording a particularly strong performance. Taiwanese equities gained 9.5%, bolstered by a rebound in exports which was driven by renewed global demand for Artificial Intelligence (AI) chips. The Taiwanese market is dominated by Taiwan Semiconductor, one of the world’s largest chipmakers. The rally occurred ahead of potential U.S. tariffs, which added urgency to shipment volumes. In contrast, China’s services sector showed signs of deceleration, expanding at its slowest pace in nine months amid subdued demand and a decline in export orders. However, on the manufacturing front, China’s Caixin/S&P Global PMI returned to expansionary territory, registering 50.4 in June from 48.3 in May.   

In the Middle East, sentiment improved following a de-escalation in geopolitical tensions. A ceasefire between Israel and Iran, alongside Iran’s restrained reaction to U.S. airstrikes on nuclear infrastructure, contributed to market stability. Additionally, optimism around potential U.S. interest rate cuts and an improved investor sentiment further supported gains in the region. 

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