For the first time since the start of 2025, emerging market (EM) equities ended the month in negative territory, bringing an end to a 10-month streak, this despite a weaker US dollar which typically provides support. The MSCI Emerging Markets Index declined 2.4% over the month, weighed down by a pullback in AI and technology related stocks. Consequently, EM equities underperformed their developed market (DM) peers, which posted a modest gain of 0.3%.

Emerging Asia led the decline, falling 3.2% over the month. Investors took profits in index heavyweights, notably Taiwan’s semiconductor and technology leaders, as global risk sentiment softened and concerns around elevated equity valuations intensified. Chinese equities also moved lower, as a sluggish economic recovery and rising geopolitical tensions between China and Japan dampened investor appetite. That said, economic data offered some green shoots with China’s seasonally adjusted headline Purchasing Managers’ Index rising again in November to 51.5, firmly back above the neutral threshold. Exports also returned to growth following an unexpected contraction in October, increasing by 5.9% year-on-year in US dollar terms.

Elsewhere in the region, Thailand, Singapore and Korea posted declines, while India, Indonesia, Malaysia and the Philippines delivered gains. In India, sentiment remained largely positive, supported by easing inflation, encouraging a move toward a finalisation of the US-India trade agreement, and lower oil prices. Malaysia and the Philippines benefited from resilient domestic demand and more balanced sector exposure. At the sector level, Consumer Discretionary and Communication Services underperformed, weighed down by China-linked consumption and internet stocks. Industrials and Information Technology followed suit driven by of profit-taking in AI and hardware beneficiaries, alongside concerns around the global capital expenditure and trade cycle.

In contrast, emerging Latin America recorded a strong advance, with the MSCI Emerging Markets Latin America Index rising a robust 6.1% over the month. Brazilian equities were the primary driver of performance, buoyed by lower-than-expected inflation data that reinforced expectations of an upcoming easing cycle. In Mexico, annual inflation accelerated to 3.8% in November 2025, its highest level since June and above expectations of 3.7%. This followed a deceleration to 3.6% in October, which had prompted the central bank to further reduce its benchmark interest rate. The policy rate now stands at 7.25%, the lowest level in three years. Mexican equities nonetheless advanced, supported by strength in precious metals.

Turning to the Middle East, Saudi Arabia, the UAE and Qatar ended the month in the red amid softer energy prices, as optimism grew around the US administration’s ability to help broker a Russia-Ukraine peace deal. In Turkey, equities weakened as inflation concerns took hold, while emerging Europe also ended the month lower. South Africa, however, proved an exception to the regional trend, finishing higher on the back of improving growth prospects and a more supportive fiscal outlook.